Export of services

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

18 November 2015 Hello,

I would like to know the service tax applicability in the following case:

Service is a software development

Service provider is termed as a 'Consultant' in the contract

Service is provided outside India.

Service recipient is a foreign company.

As per the contract, payment is made in INR by the foreign company.

Total payment will be made by the company is Rs.10.16 lakh during the year as consultancy fees.

The contract explicitly mentions that the taxes pertaining to India has to be taken care of by the service provider. Hence, service tax has to be adjusted in consultant fees. Therefore,the consultancy fees excluding service tax comes to Rs.9 lakh.

I would like to know whether this is termed as export of services? The payment comes from outside India though mentioned in INR in contract. Please guide.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 November 2015 No service tax payable on this service under rule 3 of place of provision of service rules.

Querist : Anonymous

Querist : Anonymous (Querist)

18 November 2015 Thank you. But it does not satisfy the condition of convertible foreign exchange. The contract states that payment will be made in INR.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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18 November 2015 For levy of Service tax no such condition. Only FEMA rules has to be complied.

Querist : Anonymous

Querist : Anonymous (Querist)

20 November 2015 Thank you. I really appreciate your help.

Querist : Anonymous

Querist : Anonymous (Querist)

20 November 2015 But as per Rule 6A of Service Tax Rules, receipts in convertible foreign exchange is one of the condition.

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)
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20 November 2015 Rule 6A not applicable now only place of provision of service rules applicable for export of service also.

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