GST liability on app developers
We have become habitual to using various apps on daily basis whether on android or iOS. This has also seen an increase in number of app developers in India. These app developers generally work as freelancers or as registered entities like private limited company or LLP. As these developers are providing services, GST may be applicable on case to case basis. We have tried to summarize the applicable GST laws in different cases.
The most important thing, which makes this transaction different is, since the product is an intangible product, it can be sold anywhere from anywhere around the globe. Internet is used as a medium for such transactions.
To answer this, we could lay upon a basic principle which is, for any supply to be taxable under Indian GST laws, the place of supply should be in India. Some different cases are covered below:
(a) Application developer is based in India & consumers are also based in India:
It’s a domestic supply & thus definitely taxable under GST as the place of supply is in India.
(b) Application developer is based in India & consumers are based outside of India:
Selling application would be termed as export of services, and it would not be taxable under GST in India. However, GST compliance requirement would still be there. The seller would need to get registered under GST and file GST returns. Letter of Undertaking will also need to be applied to take benefit of nil tax.
(c) Application developer is based outside India & consumers are in India:
If the consumer in India is a GST registered person, the supply would attract reverse charge and the registered consumer would be liable to comply with the GST provisions. Whereas if the customer isn’t registered the buyer is required to take a simplified registration under GST for entering in such transactions The consumer will be required to pay the applicable GST in such cases.
(d) Application developer is based outside India & consumers are also based outside of India:
This is outside the purview of Indian GST Laws.
a) Application developer is based in India & consumers are also based in India:
GST registration is required to be taken if the value of services provided is more than Rs. 20 Lakhs per annum.
b) Application developer is based in India & consumers are based outside of India:
You would be required to take registration under GST as these are categorized as export of services.
c) Application developer is based outside India & consumers are in India:
You need a GST registration under simplified GST registration scheme in form GST REG-10.
d) Application developer is based outside India & consumers are also based outside of India:
You do not need a GST registration as such services are not under the purview of Indian GST laws.
a) Application developer is based in India & consumers are also based in India:
You are required to charge GST on the applications sold by you, issue tax invoice, discharge your tax liability every month & file periodical GST returns. You could also claim eligible Input tax credit on expenses for providing such services.
b) Application developer is based in India & consumers are also based outside of India:
Practically, the most important condition that might not be met is “that you must receive payments from consumers in foreign exchange”. If this condition isn’t met, it wouldn’t be export of service & you would be required to comply as if you made a local supply.
If conditions are met & it is concluded that supply is export of services, then you are not required to charge GST. However, you will need to apply for a Letter of Undertaking for your GST number.
c) Application developer is based outside India & consumers are in India:
You are required to take GST registration under simplified scheme and will be responsible to pay IGST & file return in form GSTR-5A every month.
d) Application developer is based outside India & consumers are also based outside of India:
This is outside the purview of GST.
i) providing cloud services
(ii) provision of e-books, movie, music, software and other intangibles through telecommunication networks or internet
(iii) providing data or information, retrievable or otherwise in electronic form through a computer network
(iv) online supplies of digital content (movies, television shows, music and the like)
(v) digital data storage
(vi) Supply of software and updating thereof
(vii) Supply of distance teaching
(viii) Website supply, web-hosting, distance maintenance of programmes and equipment
(ix) online gaming.
Team Mera Profit
