Receipt of consideration in INR: Whether services can qualify as exports?

• Zero rating benefits are available for export of services, but not every service provided to a foreign party qualifies as export.
• The definition of “export of services” lays down various conditions, including that payment for the services must be received in convertible foreign exchange.
• However, in certain cases, receipt of consideration in INR is considered as receipt of foreign exchange if there is a corresponding reduction in the outflow of foreign exchange.
• This principle has been upheld by the courts.
• Therefore, it cannot be simply concluded that services will not qualify as exports if the consideration is received/retained in Indian Rupees.
• The place of supply of such services must fall outside India to qualify as export.

Source CA Arushi Jain

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