the taxtalk
GST Clarification in respect of advertising services provided to foreign client
Clarification on place of supply for data hosting services provided to foreign cloud computing service providers.
A data hosting service provider gives the infrastructure to store and manage data to cloud computing service providers without dealing directly with end users. The end users/customers/subscribers access cloud computing services seamlessly over the internet through technology hosted on data centers.
Fact and Issue: Clarification was sought on the place of supply for data hosting services provided by Indian service providers to overseas cloud computing companies. Field officers questioned whether the place of supply should be India, thus denying export benefits.
Clarification: The circular clarifies that data hosting service providers are not intermediaries, nor are their services tied to goods or immovable property. The place of supply is where the recipient is located, i.e., outside India in these cases.
Implication: Data hosting services provided to overseas cloud computing companies are considered export services, eligible for export benefits under the GST regime.