𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻 𝗼𝗻 𝗣𝗹𝗮𝗰𝗲 𝗼𝗳 𝗦𝘂𝗽𝗽𝗹𝘆 𝗳𝗼𝗿 𝗗𝗮𝘁𝗮 𝗛𝗼𝘀𝘁𝗶𝗻𝗴 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀 - 𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗡𝗼. 𝟮𝟯𝟮/𝟮𝟲/𝟮𝟬𝟮𝟰-𝗚𝗦𝗧 📢 The Ministry of Finance issued clarifications on the place of supply for data hosting services provided by Indian service providers to cloud computing companies located outside India.

🔍 𝗞𝗲𝘆 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀: 𝟭. 𝗜𝘀𝘀𝘂𝗲: Clarifications were sought on whether data hosting services provided by Indian service providers to foreign cloud computing service providers qualify as intermediary services, involve goods "made available," or relate to immovable property.

𝟮. 𝗪𝗵𝗲𝘁𝗵𝗲𝗿 𝗗𝗮𝘁𝗮 𝗛𝗼𝘀𝘁𝗶𝗻𝗴 𝗦𝗲𝗿𝘃𝗶𝗰𝗲 𝗣𝗿𝗼𝘃𝗶𝗱𝗲𝗿𝘀 𝗤𝘂𝗮𝗹𝗶𝗳𝘆 𝗮𝘀 𝗜𝗻𝘁𝗲𝗿𝗺𝗲𝗱𝗶𝗮𝗿𝗶𝗲𝘀: 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: Data hosting service providers offer their services on a principal-to-principal basis and do not interact with end users of cloud computing services. Therefore, they do not qualify as intermediaries under Section 2(13) of the IGST Act, and the place of supply cannot be determined as per Section 13(8)(b).

𝟯. 𝗪𝗵𝗲𝘁𝗵𝗲𝗿 𝗗𝗮𝘁𝗮 𝗛𝗼𝘀𝘁𝗶𝗻𝗴 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀 𝗥𝗲𝗹𝗮𝘁𝗲 𝘁𝗼 𝗚𝗼𝗼𝗱𝘀 “𝗠𝗮𝗱𝗲 𝗔𝘃𝗮𝗶𝗹𝗮𝗯𝗹𝗲”: 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: Data hosting services are provided using the infrastructure, hardware, and software owned or leased by the service provider, not the client’s equipment. Therefore, the services cannot be considered in relation to goods "made available," and the place of supply cannot be determined under Section 13(3)(a) of the IGST Act.

𝟰. 𝗪𝗵𝗲𝘁𝗵𝗲𝗿 𝗗𝗮𝘁𝗮 𝗛𝗼𝘀𝘁𝗶𝗻𝗴 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀 𝗥𝗲𝗹𝗮𝘁𝗲 𝘁𝗼 𝗜𝗺𝗺𝗼𝘃𝗮𝗯𝗹𝗲 𝗣𝗿𝗼𝗽𝗲𝗿𝘁𝘆: Clarification: Data hosting services are not directly related to immovable property but involve a comprehensive service that includes managing data centers, infrastructure, and equipment. Thus, the place of supply cannot be determined under Section 13(4) of the IGST Act.

𝟱. 𝗣𝗹𝗮𝗰𝗲 𝗼𝗳 𝗦𝘂𝗽𝗽𝗹𝘆: 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: As the data hosting services do not fall under specific provisions of Sections 13(3) to 13(13), the place of supply will be determined as per the default rule in Section 13(2), i.e., the location of the recipient. For overseas cloud computing service providers, the place of supply will be considered outside India.

𝟲. 𝗘𝘅𝗽𝗼𝗿𝘁 𝗼𝗳 𝗦𝗲𝗿𝘃𝗶𝗰𝗲𝘀: 𝗖𝗹𝗮𝗿𝗶𝗳𝗶𝗰𝗮𝘁𝗶𝗼𝗻: Data hosting services provided by Indian companies to foreign cloud computing providers can be considered export of services, subject to meeting the criteria of Section 2(6) of the IGST Act.

📜 𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗜𝗻𝗳𝗼𝗿𝗺𝗮𝘁𝗶𝗼𝗻: 𝗖𝗶𝗿𝗰𝘂𝗹𝗮𝗿 𝗡𝗼.: 232/26/2024-GST 𝗗𝗮𝘁𝗲: 10th September 2024 𝗦𝗼𝘂𝗿𝗰𝗲: Ministry of Finance, Government of India

This circular ensures that data hosting services provided to foreign entities are considered exports, clarifying GST applicability and promoting international trade.