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Service tax on pharma testing for foreign companies

CA AMIT SOMANI (Proprietor) (38 Points)

13 February 2016

One of my client is engaging in pharma testing of foreign co.....foreing co. give them sample for testing....they do testing and research on the same....and received the payments in foreign currency only.... Do they liable to pay service tax or they covered under "export of service".....having a bit confusion regarding "place of provision of service"...... If anyone having any strong view over it plz do reply ASAP.....

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3 Replies

manisha (cs) (1118 Points)
Replied 13 February 2016

As per Section 66 D of the Finance Act, 1994, 'there shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed. As per rule 3 of the Place of Provision of Services Rules, 2012, 'the place of provision of a service shall be the location of the recipient of service'. Your service does not fall in any of the Rules 4 to 11 of the said Rules or in the negative list of services or in the list of services covered by any exemption notification. In your case, the service recipient is located abroad and so, the place of provision of service is a non-taxable territory. Therefore, you need not pay service tax on such services.