Notification No. 02/2019 – Integrated Tax (Rate) Explained

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Notification No. 02/2019 - Integrated Tax (Rate): Seeks to rescind Sl. No. 10D of Notification No. 09/2017-Integrated Tax (Rate) dated 28.06.2017 in relation to exemption of IGST on supply of services having place of supply in Nepal or Bhutan, against payment in Indian Rupees.

[TO BE PUBLISHED IN THE GAZZETE OF INDIA, EXTRAORDINARY, PART II, SECTION 3, SUB-SECTION (i)]

G.S.R. (E).- In exercise of the powers conferred by sub-section (1) of section 6 of the Integrated Goods and Services Tax Act, 2017 (13 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby makes the following further amendments in the notification of the Government of India, in the Ministry of Finance (Department of Revenue) No.9/2017- Integrated Tax (Rate), dated the 28th June, 2017, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 684 (E), dated the 28^th June, 2017, namely:-

In the said notification, in the Table, serial number 10D and the entries relating thereto, shall be omitted.

(Gunjan Kumar Verma)
Under Secretary to the
Government of India

Note: -The principal notification No. 9/2017 - Integrated Tax (Rate), dated the 28^th June, 2017 was published in the Gazette of India, Extraordinary, vide number G.S.R. 684 (E), dated the 28^th June, 2017 and was last amended by notification No. 29/2018 – Integrated Tax (Rate), dated the 31^st December, 2018 vide number G.S.R. 1276(E), dated the 31^st December, 2018.

📚 Frequently Asked Questions (FAQs): Notification No. 02/2019 - Integrated Tax (Rate)

Q1: What is Notification No. 02/2019 – Integrated Tax (Rate)?

Answer:
It is a GST notification issued on 04 February 2019 that withdraws IGST exemption earlier available for services supplied to Nepal or Bhutan against INR payments by deleting Serial No. 10D from Notification 09/2017.

Q2: What exactly was Serial No. 10D?

Answer:
Serial No. 10D exempted IGST on services where:
Place of supply was Nepal or Bhutan
Payment received in INR
This exemption is now removed.

Q3: From which date is IGST applicable on such services?

Answer:
IGST is applicable from 04 February 2019, the date of publication of Notification No. 02/2019.

Q4: Are services to Nepal or Bhutan now treated as exports?

Answer:
Not automatically.
They must satisfy Section 2(6) of IGST Act (Export of Services), including:
Payment in convertible foreign exchange (with RBI exceptions)
Supplier & recipient in different countries

Q5: If payment is received in INR, can service still be export?

Answer:
Generally No, unless RBI specifically allows INR as deemed foreign exchange. Otherwise, IGST applies.

Q6: Which businesses are most impacted by this change?

Answer:
IT & software services
Chartered Accountants & Consultants
Architects & Engineers
Marketing & outsourcing agencies
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Q7: Is GST registration mandatory after this notification?

Answer:
Yes, if:
You provide taxable services
Turnover exceeds threshold
Register easily with Finodha:
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Q8: How should IGST be charged on invoices now?

Answer:
Charge applicable IGST rate
Mention Place of Supply – Outside India (Nepal/Bhutan)
Report in GSTR-1 & GSTR-3B
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Q9: Can input tax credit (ITC) be claimed now?

Answer:
Yes ✅
Since the supply is taxable, eligible ITC can be claimed, unlike earlier exempt services.

Q10: Does this notification apply to goods also?

Answer:
❌ No.
This notification only affects services, not goods.

Q11: What happens if GST was not charged after Feb 2019?

Answer:
It may lead to:
Tax demand
Interest under Section 50
Penalty under Section 73/74
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Q12: Is LUT applicable for Nepal/Bhutan services now?

Answer:
Only if the service qualifies as export of service. Otherwise, LUT cannot be used.

Q13: Does this impact GST refund eligibility?

Answer:
Yes. Since exemption is withdrawn:
Refund of accumulated ITC may now be available
Depends on export qualification

Q14: What RBI role is relevant here?

Answer:
RBI permissions determine whether INR payment can be treated as foreign exchange under GST export rules.

Q15: How can Finodha help businesses affected by this notification?

Answer:
Finodha assists with:
GST impact analysis
Correct invoicing & classification
GST return filing
ITC optimization
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