Notification No. 42/2017 - Integrated Tax (Rate) Explained

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Notification No. 42/2017 - Integrated Tax (Rate): Seeks to amend notification No. 9/2017- Integrated Tax (Rate) so as to exempt IGST on inter-state supply of services to Nepal and Bhutan against payment in INR.

GST: [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 28^th 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, after serial number 10C and the entries relating thereto, the following shall be inserted, namely:-

(1)	(2)	(3)	(4)	(5)
“10D	Chapter 99	Supply of services having place of supply in Nepal or Bhutan, against payment in Indian Rupees	Nil	Nil”.

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

Note:-The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 9/2017- Integrated Tax (Rate), dated the 28^th June, 2017, vide number G.S.R. 684 (E), dated the 28th June, 2017 and was last amended by notification No. 33/2017 - Integrated Tax (Rate), dated the 13^th October, 2017 vide number G.S.R.1276 (E), dated the 13^th October, 2017.

📚 Frequently Asked Questions (FAQs): Notification No. 42/2017 — Integrated Tax (Rate)

Q1: Is GST applicable on services to Nepal in INR?

Answer: No.
Notification 42/2017 provides exemption if payment is received in INR and place of supply is Nepal.

Q2: Does this apply to Bhutan also?

Answer: Yes.
Both Nepal and Bhutan are covered under this notification.

Q3: Is this treated as export of services?

Answer: Not exactly.
It gets similar benefit but may not meet all export conditions.

Q4: What if payment is in foreign currency?

Answer: Then normal export rules apply.
Such services qualify as export of services.

Q5: Can ITC be claimed?

Answer: Depends on classification.
Exempt supplies may restrict ITC.

Q6: Is LUT required?

Answer: Not always.
Depends on whether treated as export or exempt supply.

Q7: What is place of supply rule?

Answer: Location of recipient.
It must be Nepal or Bhutan.

Q8: Does this apply to goods also?

Answer: No.
This notification applies only to services.

Q9: What if wrong GST is charged?

Answer: It should be corrected.
Refund or adjustment may be needed.

Q10: Is documentation required?

Answer: Yes.
Proof of recipient location and payment is important.

Q11: Can freelancers use this benefit?

Answer: Yes.
If conditions are satisfied.

Q12: Is this still applicable?

Answer: Yes, currently active.
Always check for updates.

Q13: Why special treatment for these countries?

Answer: Due to trade relations.
India has unique monetary arrangements with Nepal & Bhutan.

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