I would like to have some clarification on the above mentioned topic.
A person in India is providing consultancy service to a company outside India. I would like to know whether service tax is applicable for Consultancy Fees received. Fees is received in the Foreign currency and the person providing service is residing in India and service is provided from India to the foreign company.
22 July 2025
Hey! Here’s the scoop on service tax for consultancy services provided from India to a foreign company:
Is Service Tax Applicable? Under Indian Service Tax law (pre-GST regime), services exported out of India are considered “export of services” if they fulfill certain conditions.
Export of services is zero-rated, which means:
No service tax is payable on export of services.
The service provider can claim a refund of any input service tax credit (if applicable).
Conditions for Export of Services (as per Service Tax Rules): Location of Recipient: The recipient of the service must be located outside India.
Location of Supplier: The supplier of the service (you) must be located in India.
Place of Provision of Service: The service must be provided outside India.
Payment in Convertible Foreign Exchange: The payment for the service must be received in convertible foreign exchange or in Indian rupees wherever permitted by the Reserve Bank of India.
Application to your case: You are in India (supplier located in India).
The company is outside India (recipient located outside India).
You provide consultancy services from India to the foreign company.
Fees is received in foreign currency.
All conditions for export of services are met.
Conclusion: No service tax is payable on the consultancy fees received from the foreign company (zero-rated supply).
You can claim refund of input service tax credit on inputs/input services used to provide this consultancy service.
However, you need to maintain proper documentation to prove the service is exported (like contract, proof of payment in foreign currency, invoices, etc.).
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