Circular No.: 210/04/2024-GST
Date of Circular: 26th June 2024
Relevant Sections and Rules:
- CGST Act, 2017:
- Section 31(3)(f): Self-invoicing for reverse charge
- Section 168(1): Power to issue instructions
- Schedule I, Sl. No. 4: Import of services from related persons deemed supply even without consideration
- CGST Rules, 2017:
- Rule 28(1): Valuation for supply between related/distinct persons
- Second proviso to Rule 28(1): Deemed open market value when full ITC available
Summary of Clarification Provided:
- Import of Services from Foreign Related Parties – Reverse Charge Applicability:
Import of services by an Indian registered person from a related foreign entity (e.g., parent, subsidiary, affiliate) without consideration, but in the course or furtherance of business, is a deemed supply under Schedule I.
Tax must be paid by the Indian entity under reverse charge with self-invoice as per Section 31(3)(f). - Valuation When Full ITC Is Available:
Where the Indian recipient is eligible for full input tax credit, the value declared in the self-invoice is deemed to be the open market value, in accordance with second proviso to Rule 28(1).
If no self-invoice is raised by the Indian entity, then the value of services may be deemed as Nil, and that Nil value is accepted as open market value if full ITC is available.
- Harmonization with Circular No. 199/11/2023-GST:
The treatment for import of services from foreign related parties is aligned with earlier domestic clarification in Circular No. 199/11/2023, wherein:
- Services by Head Office to Branch Office (distinct persons) with full ITC were deemed to have open market value equal to invoice value (even if Nil).
- Uniform Application of Rule 28(1) Proviso:
The second proviso to Rule 28(1) applies universally—whether the transaction is:
- Between distinct persons (domestic), or
- Between related persons (foreign)—as long as full ITC is available, the invoice value or Nil value is deemed as open market value.
Source: Circular No.: 210/04/2024-GST
