Liability of service tax for service provided outside india

This query is : Open

DHAVAL (Querist)
Follow

10 December 2014 Hello all,

One of my friend is running firm which creates websites for the companies situated outside india

and his turnover is more than 10 lacs

Now, my question is that is he liable for service tax ?
and is liable to get registered under service tax act ?

Pls reply

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
Follow

10 December 2014 the ans is yes he is liable.

Message likes : 1 times

SANYAM ARORA

SANYAM ARORA (Expert)
Follow

10 December 2014 Agreed yes it will be applicable.
As per Rule 3 of place of provision of services,

location of Sp will be considered

Message likes : 1 times

DHAVAL

DHAVAL (Querist)
Follow

10 December 2014 Sir, if possible pls explain in detail with provision relating to it .....

As i thought it will be exempted as export of services

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
Follow

11 December 2014 In this case when service is provided outside india then service provider has to bear the service tax

SANYAM ARORA

SANYAM ARORA (Expert)
Follow

11 December 2014 Mr Dhawal - Al though it is Export of service but its Place of provision is falling u/r 3 -i.e. location of SP.

Hence taxable

Aditya Umarji

Aditya Umarji (Expert)
Follow

11 December 2014 Rule 3 of POPS, 2012 speaks of place of provision in general. All other rules are specific in nature.

I have laid out Rule 3 for analysis;

Place of provision generally.- The place of provision of a service shall be the location of the recipient of service:

Provided that in case the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service.

After reading paragraph 1 it is clear that the place of provision will be considered that of the service receipient and not service provider. In our case the firm is engaged in developing websites for clients based out of India. The place of provision in such cases would be out of India and hence would be treated as export.

Taxability:-
Since the services are provided out of India they would be exempt subject to:
*Provider is in taxable territory (Condition Satisfied)
* Receipient is located os India (Condition Satisfied)
*Service is not in Negative List (Condition Satisfied)
* Place of Provision of Service is outside India (Condition Satisfied u/r 3)
* Payment has been received in foreign exchange (Condition needs verification)

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now