MK & CO
Advisory Note
Client: Vyom Enterprise
Date: 28-01-2026
1. Executive Summary
• These advisory analyses the Goods and Services Tax (GST) implications on services
provided by Vyom Enterprise, India, to Extechs Renewables Pvt Ltd, Australia, where
consideration is received in Indian Rupees (INR).
• Based on the statutory conditions prescribed under the Integrated Goods and Services
Tax Act, 2017 (IGST Act), receipt of consideration in convertible foreign exchange is a
mandatory requirement for qualification as export of services.
• Since this condition is not fulfilled, the supply does not qualify as an export of services
and is accordingly liable to Integrated GST (IGST) at the applicable rate.
• Receipt of consideration in INR also has implications under the Foreign Exchange
Management Act, 1999 (FEMA) and the related Reserve Bank of India (RBI) directions.
2. Background / Facts
Based on information provided, the relevant facts are as under:
• Supplier: Vyom Enterprise, located in India
• Recipient: Extechs Renewables Pvt Ltd, located in Australia
• Nature of Services: Business support services, IT/CRM and digital services
• Relationship: Principal-to-principal
• Place of Performance: Services performed from India
• Consideration: Received in Indian Rupees (INR)
• Recipient Location: Outside India
This advisory is prepared strictly on the basis of the above facts. No assumption has been made
regarding any specific approval or permission from the Reserve Bank of India (RBI) allowing receipt
of consideration in INR.
3. Export of Services: Section 2(6) of the IGST Act, 2017
Statutory Provision
“Export of services means the supply of any service when—
• the supplier of service is located in India;
• the recipient of service is located outside India;
• the place of supply of service is outside India;
• the payment for such service has been received by the supplier of service in convertible
foreign exchange; and
• the supplier of service and the recipient of service are not merely establishments of a distinct
person in accordance with Explanation 1 in section 8.”
Explanation
In the present case, conditions relating to the location of the supplier, location of the recipient, place
of supply, and distinct establishment are satisfied. However, the condition requiring receipt of
consideration in convertible foreign exchange is not satisfied, as payment is received in Indian
Rupees (INR). Since all five conditions are required to be satisfied cumulatively, the supply does not
qualify as export of services.
4. GST Taxability: Section 7 of the CGST Act, 2017
Statutory Provision
“Supply includes all forms of supply of goods or services or both such as sale, transfer, barter,
exchange, licence, rental, lease or disposal made or agreed to be made for a consideration in the
course or furtherance of business.”
Explanation
The services are supplied for consideration and in the course or furtherance of business. Since the
supply does not qualify as export of services, it constitutes a taxable supply under GST.
5. Zero-Rated Supply: Section 16 of the IGST Act, 2017
Statutory Provision
“Zero rated supply means any of the following supplies of goods or services or both, namely-
• export of goods or services or both; or
• supply of goods or services or both to a Special Economic Zone developer or a Special
Economic Zone unit.”
Explanation
As the supply does not qualify as export of services, it does not fall within the scope of zero-rated
supplies under Section 16 of the IGST Act. Accordingly, zero-rating benefits are not available.
6. Place of Supply: Section 13(2) of the IGST Act, 2017
Statutory Provision
“The place of supply of services, except the services specified in sub-sections (3) to (13), shall be the
location of the recipient of services.”
Explanation
Since the recipient of services is located in Australia, the place of supply is outside India. However, as
the supply does not qualify as export of services, GST is still applicable, and the transaction is treated
as an inter-State supply.
7. Intermediary Provisions: Section 2(13) of the IGST Act, 2017
Statutory Provision
“Intermediary means a broker, an agent or any other person, by whatever name called, who arranges
or facilitates the supply of goods or services or both, or securities, between two or more persons, but
does not include a person who supplies such goods or services or both or securities on his own
account.”
Explanation
Vyom Enterprise supplies services on its own account on a principal-to-principal basis and does not
arrange or facilitate supply between third parties. Accordingly, the intermediary provisions, including
Section 13(8)(b) of the IGST Act, are not applicable.
8. FEMA and RBI Implications
Statutory Framework
Under the Foreign Exchange Management Act, 1999, read with RBI Master Directions on Export of
Services, export of services is generally recognised only when consideration is received in convertible
foreign exchange, unless receipt in INR is specifically permitted by RBI.
Explanation
Receipt of consideration in INR, without specific RBI permission, may result in FEMA compliance
risk and also weakens the characterisation of the transaction as an export for GST purposes, thereby
increasing audit and regulatory scrutiny.
9. Advisory and Recommendations
• Levy and discharge IGST at the applicable rate of 18% on invoices raised for such services.
• Ensure correct GST invoicing and timely return compliance.
• Review contractual terms to evaluate feasibility of receiving consideration in convertible
foreign exchange for future transactions.
• Maintain FEMA and RBI-related documentation to address potential regulatory queries.
10. Conclusion
Based on the facts and applicable statutory provisions, the services supplied do not qualify as export
of services due to receipt of consideration in Indian Rupees. Accordingly, the supply is taxable under
GST and liable to IGST at the applicable rate, with attendant FEMA compliance considerations.
11. Disclaimer
This advisory note is issued for informational and advisory purposes only, based on facts provided
and the law in force as on the date of issuance. It does not constitute a legal opinion, assurance, or
certification and should not be relied upon as such.