MedicaL TRanscription

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Sivaraman A R (Querist)
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25 October 2010

Sir. My client is doing medical transcription service. Is this considered as export and get exemption. The client is getting payment from a Indian company.

Related question posted by me and ans for this .
SIVA One of my clients whose gross income from medical transcription has crossed 10,00,000 for the year 2009-10. Heard that this service is exempted from tax vide Notification No. 8 /2003 - Service Tax dt 20th June, 2003.

My question is whether this client should take registration under service tax and file ST return.

ANSWER
1. CA Shailesh Kumar Bhagat
Whenever , the service income reaches to 9 lakhs , service tax registration is must.

Your client should take reg. pay tax on above 10 lakhs amount, and also file the return.

2. Madhukar N Hiregange
I do not find not/8/2003 vaid today. I think it was withdrawn soem time back. Therefore provided that his pr yr. 2008-09 value fo taxable servcies did not exceed Rs. 10 lakhs he would be eligible for 10 lakhs exemption on receipt basis. After that the ST would be payable.

CA Shailesh Kumar Bhagat

CA Shailesh Kumar Bhagat (Expert)
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25 October 2010 To treat service as export, receipt must be in convertible foreign currency.

Asha Kanta Sharma

Asha Kanta Sharma (Expert)
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03 August 2024 In the context of medical transcription services, let's address the questions related to service tax and whether it qualifies as an export of services.

### 1. **Export of Services and Exemption**

**Export of Services:**
- **Definition:** According to the Indian tax laws, an export of services means the supply of a service where:
- The supplier of the service is located in India.
- The recipient of the service is located outside India.
- The place of supply of the service is outside India.
- The payment for the service is received in convertible foreign exchange or in Indian rupees wherever permitted by the RBI.

**Medical Transcription Services:**
- If your client’s medical transcription services are provided to a foreign client (i.e., the recipient is located outside India) and the payment is received in convertible foreign exchange, then these services would qualify as an export of services.

**Tax Implications:**
- **Service Tax:** Export of services is generally exempt from service tax. This exemption was provided under various notifications before the implementation of GST. For the financial year 2009-10, Notification No. 8/2003-ST provided exemptions, but this was replaced by the new tax regime under GST.

### 2. **Service Tax Registration and Filing**

**Pre-GST Scenario (Service Tax):**
- **Exemption Limit:** Before the introduction of GST, if the annual gross income from services crossed ₹10 lakh (₹9 lakh in some earlier notifications), service providers were required to obtain registration and file service tax returns.
- **Service Tax Registration:** If your client’s gross income from medical transcription crossed ₹10 lakh in a financial year, they would be required to take service tax registration and file service tax returns.

**Notification Status:**
- **Notification No. 8/2003-ST:** This notification provided exemptions but may have been withdrawn or updated over time. It’s crucial to check the current status of such notifications or circulars for specific periods.

### 3. **Current Scenario (Post-GST):**

**Goods and Services Tax (GST):**
- **GST Applicability:** With the introduction of GST from July 1, 2017, the service tax regime was replaced. Medical transcription services are subject to GST.
- **Export of Services under GST:** Exports of services are zero-rated under GST, meaning that the export services are taxed at 0% GST. Businesses providing export services can claim a refund on input tax credits.

**Steps to Follow:**
1. **GST Registration:** If your client provides services to foreign clients, they must obtain GST registration if their aggregate turnover exceeds the threshold limit.
2. **Filing Returns:** They need to file GST returns, including export of services, and claim refunds on input tax credits.

### Summary:

1. **Medical Transcription as Export:** If the medical transcription services are provided to clients outside India and payment is in convertible foreign exchange, it qualifies as an export of services and is exempt from service tax (pre-GST) or zero-rated under GST (post-GST).

2. **Service Tax Registration (Pre-GST):** If the gross income exceeded ₹10 lakh, service tax registration was required. This requirement has been replaced by GST registration.

3. **Post-GST:** GST applies to all services, including medical transcription. Exports are zero-rated, and businesses can claim refunds for input tax credits.

For the most accurate and up-to-date advice, especially if transitioning from service tax to GST, consulting a tax professional or GST consultant is recommended.

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