Goods and Services Tax (GST) in India: A GCC Operator’s Guide
Why a GCC is treated as an exporter, how to claim refunds and the Letter of Undertaking mechanism.
A captive GCC invoicing its foreign parent is, in GST terms, an exporter of services. Services qualify as exports when the supplier is in India, the recipient is outside India, the place of supply is outside India, payment is received in convertible foreign exchange, and the two entities are not the same person under section 8 of the Integrated GST Act.
Two export mechanisms
A GCC can choose either route, both lead to a zero rated outcome.
- Export under a Letter of Undertaking (LUT). No tax paid at invoicing. Input Tax Credit accumulates and is refundable. Filed annually on the GST portal.
- Export with payment of Integrated GST (IGST). Tax is paid at invoicing and refunded later. Cash flow heavier; almost no GCC chooses this route today.
Place of supply
For most GCC services (engineering, finance, support), the place of supply is the location of the recipient, that is, the foreign parent. This is what makes the service an export. Specific carve outs apply for intermediary services (section 13(8)) where the place of supply defaults to the supplier’s location, defeating export status. Structure the contract to avoid the intermediary characterisation.
Input Tax Credit (ITC) refund
The accumulated ITC on inputs (rent, software, telecom, professional fees) is refundable in cash, monthly or quarterly, under section 54 of the Central GST Act. Typical refund cycle is 60 to 90 days. A well managed GCC recovers 95 percent plus of its input GST.
Reverse charge
Imports of services (foreign software subscriptions, foreign consultants) attract GST under reverse charge. The GCC pays the tax to the government and claims it back as ITC in the same return cycle, cash neutral.
Frequently asked questions
No. With a Letter of Undertaking in place, the invoice carries zero GST. The transaction is reported in your GSTR-1 as an export.
Filed monthly. With clean documentation, 60 to 90 days. Software Technology Parks of India registered units sometimes see 45 days.
More from the hub
Headline rates, the 22 percent concessional regime, Minimum Alternate Tax and what a Global Capability Centre actually pays.
How a captive GCC is remunerated by its foreign parent, with the bare minimum compliance burden.
Inbound capital, External Commercial Borrowings, foreign currency accounts and dividend repatriation under the Foreign Exchange Management Act.
The step by step path from name reservation to operational entity, in 30 to 45 working days.
Provident Fund, Gratuity, the four Labour Codes and the real fully loaded cost of an India hire.
Need this mapped to your GCC plan?
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