My friend is doing medical transcription export service, the turnover will be above 10 lakhs, does service tax is applicable for this service, wheather registration of service tax is necessary.
03 August 2024
### Medical Transcription Export Service and Service Tax Requirements
#### **1. Classification and Taxability of Medical Transcription Services**
**Export of Services:** - **Definition:** For a service to qualify as an export under Indian tax law, it must meet the following criteria: - The **service provider** 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 Indian rupees wherever permitted by the RBI.
**Medical Transcription Services:** - Medical transcription services can qualify as an export of services if the recipient is located outside India, and payment is received in convertible foreign exchange.
#### **2. Service Tax Applicability for Export Services**
**Service Tax on Exports (Pre-GST Era):** - **Exemption:** Export of services was generally exempt from service tax. This exemption meant that even if the turnover exceeded ₹10 lakhs, service tax was not applicable on export services. - **Registration:** Despite the exemption on the export of services, if the turnover of the service provider crossed ₹10 lakhs, they were required to obtain service tax registration and file service tax returns. The registration was mandatory to comply with tax regulations and to report the services provided.
**Notification Reference:** - **Notification No. 8/2003-ST:** Provided exemptions for certain services, including exports. This notification was applicable before the introduction of GST. However, it is essential to check the specific notifications relevant to the period for accurate details.
#### **3. Post-GST Scenario**
**GST on Export Services:** - **Zero-Rated Supply:** Under GST, export services are considered zero-rated. This means that GST is charged at 0% on export services. Exporters can claim a refund on the input tax credits related to such exports. - **GST Registration:** Even though the export services are zero-rated, obtaining GST registration is mandatory if the turnover exceeds the threshold limit. GST registration allows exporters to claim refunds on input tax credits.
**Filing Requirements:** - **GST Returns:** Registered exporters must file GST returns, including the details of exports and input tax credits claimed.
### Summary:
1. **Pre-GST Era (Service Tax):** - **Service Tax:** Not applicable on export services, including medical transcription services, due to the exemption. - **Registration:** Mandatory to obtain service tax registration if turnover exceeded ₹10 lakhs. Filing service tax returns was also required.
2. **Post-GST Era:** - **GST:** Export services are zero-rated, meaning GST is charged at 0%. Exporters can claim a refund on input tax credits. - **Registration:** GST registration is necessary if turnover exceeds the prescribed limit, regardless of the zero-rated status of exports. - **Filing Returns:** Required to file GST returns to report exports and claim input tax credit refunds.
For the most accurate and detailed guidance, especially regarding specific historical provisions or for ongoing GST compliance, consulting a tax professional or chartered accountant is recommended. They can provide tailored advice based on the latest regulations and your specific circumstances.
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