Question

Against supply of services for export, the amount is received by the supplier in foreign currency. There is a gain in this transaction to the supplier due to exchange rate fluctuation. Is the supplier liable to pay GST on the gain due to exchange fluctuation? If no under which provisions?

Answer
 

NOTE: Export of service is Zero Rated Supply eligible for refund of GST.

Illustration: Service exported for $100. on this day $100 = Rs. 50,000. Service Provider (Indian company) enters into Put option with bank to lock the rate @ $100 =Rs. 50,000.
Invoice raised for $100 and amount collected $100. Refund of Gst claimed.
Now,
Case 1: $100 converted into Rs. 50,000 using Put option.
NO IMPLICATIONS

Case 2: $100 converted into Rs. 60,000 at current rate and letting Put option expire.
(i) Transaction between bank and company is Transaction in money therefore this is neither goods nor service.
(ii) Commission charges deducted by bank are a consideration of supply of service ( forex conversion service ) this is liable to GST.
(iii) Extra gains earned by company i.e 60,000-50,000 = 10,000 are Capital Gains chargeable under Income Tax.
(iv) This 10,000 gains generated can not be said to be a consideration on account of any Supply. since there is no Supply GST is not levied. (Reply dt.09/03/2019)