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Service tax issue through paypal for india based software co

3699 views 3 replies

tps23

Others

25 Points Posted on 29 May 2013

We are an India based mid size software company . We get most of our revenue through overseas projects. Money wired directly to our account in USD or EURO is export earnings and is not liable for service tax.

But many of our bills are small services in the range of $50-$500 . Clients prefer paying these through paypal.com. Through paypal the payment gets transferred to our account in INR which makes us pay service tax (it is not recognized as export earnings)

Is there a way to claim export benefit on such payment. Or is there a way wherein we can claim service tax off set. Any advise Thanks

Replies (3)

Arun Prasadh

Practicing CA

49 Points Posted on 29 May 2013

Check the below link relating to foreign amount received through paypal

https://taxindia.pz10.com/2013/04/service-tax-on-payment-received-through.html

This could be helpful.

tps23

Others

25 Points Posted on 29 May 2013

Thank you Arun. Yes indeed it is of good help.

In the article it is mentioned

Receipt of payment in convertible foreign exchange is no more a pre-condition on and after 01.07.2012.

If you may know where an we find more info on this

Arun Prasadh

Practicing CA

49 Points Posted on 29 May 2013

I don't see any rules, notifications, exempting the need for foreign currency. As per Rule 6A of ST rules 1994, receipt of money in convertible foreign exchange is one of the condition to qualify as export of services.

You may adopt what is given in article to convince your tax authorities.