I have a client doing the export of service for a software company from India as he is an individual getting monthly invoice around 2800 Dollars....
Query1:- He is getting amount from paypal by deducting around 300 Dollars for their exchange transaction, on what amount service tax return to be filed whether on Gross or on Net amount after paypal deduction.......
Query2:- Does he need to register for service tax and whether he need to pay any service tax as he is exporting services... By Knowing the above queries with what documents should i proceed for service tax registration for the department ..... Thank You
05 October 2013
Hi, Query 1 - He is not require to charge service tax on export of services, as software services in export are exempted. Query-2 Yes, he need to register for service tax under Reverse Charge Mechanism for availing import of services i.e. Paypal in your case. He need to pay 12.36% service tax on the amount of deduction from paypal, he will get the credit input in the next month. SUppose he paid 500 Dollar in the month of september, then he will pay 12.36% service tax on 5-Oct-13 and will get this service tax paid as input credit in the month of October when he will make the payment on 5-Nov-13.
05 October 2013
Query3:- hi sir, Why we need to pay service tax on paypal charges amount ....already for the service in converting dollars into rupees they are deducting 300dollars....and at the same time we are not importing any services...as we are exporting the service in developing the software....
Query4:- You Said Export of services is exempted so my client comes under the category and return should be showed for every 6months following 25th...While filing this return what amount should be shown i.e., before charging paypal amt or after charges paypal
Query5:- In his I.T Return what deductions are allowable as he doing service by keeping an office....
Query6:- Can I claim 300dollars what they deducted....If no can i Show this deducted amount for any deduction for my client for his advantage...
06 October 2013
Query -3 . As you are mentioning they charge you 300 dollars for converting dollar to rupees, it means you have taken their services for whatever purpose, it is import of services hence you come under the obligagtion of paying service tax on reverse charge mechanism.
Query-4 as you dont come under service tax you will show your sale under expempted service tax sale i.e. Total 2800 and 300 dollar as expenses then it means total net effect would be 2500 dollars only.
Query5 - If he maintains books of accounts than all expenses to run the business will be consider as deduction, but if he is sole proprietor and doesnt maintain any books he would be treated as an individual, income exemption would be 200000INR.
CAclubindia
