Service received outside india

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2013 kindly reply regarding applicability of service tax on professional services taken by a co. from outside india for the services received outside india.

kunal

kunal (Expert)
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28 January 2013 in my view service tax is not applicable because service tax is destination based tax

as in your case services are received in non-taxable territory

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2013 okk thanksssss

Querist : Anonymous

Querist : Anonymous (Querist)

28 January 2013 okk thanksssss but can you refer any clause, section, clarification where it has been given

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 You're asking about whether service tax is applicable on professional services received by an Indian company from outside India, for services received outside India, as of 28 January 2013.

Let’s break it down with legal reference, and clarify with exact clauses/sections/rules.

🧾 1. Law Applicable: Place of Provision of Services Rules, 2012 (POPS Rules)
These rules came into effect on 1 July 2012, and they determine the "place of provision" of a service — which is crucial in deciding taxability under Service Tax.

📌 Key Principle:
Service tax is applicable only when the "place of provision" of a service is in the "taxable territory" (i.e., India, excluding Jammu & Kashmir at that time).

🧩 Your Case:
Recipient: An Indian company

Service Provider: Located outside India

Service Consumption: Outside India

Service Nature: Professional services

✅ Rule Reference – POPS Rules, 2012:
👉 Rule 3 – General Rule:
The place of provision of a service shall be the location of the service recipient.

BUT...

This is overridden in specific cases.

👉 Rule 4 – Performance-based services:
For services where physical presence/performance is essential (e.g., professional, architectural, consultancy rendered abroad), the place of provision is the location where the services are actually performed.

✔️ In your case, if the entire service is performed outside India, then place of provision = outside India.

🟢 Conclusion:
Since the place of provision is outside India, service tax is NOT applicable, even though the recipient is in India.

✅ Legal Provisions/References to Quote:
Section 66B of Finance Act, 1994 (post 1 July 2012):

"There shall be levied a tax on all services, other than those specified in the negative list, provided or agreed to be provided in the taxable territory..."

Rule 4 of Place of Provision of Services Rules, 2012:

"...in case of services that are physically performed outside India, the place of provision shall be the place where the service is actually performed."

CBEC Education Guide (June 2012), Para 5.4.1:

"If the entire service is performed outside India, then such service is not taxable under service tax, even if the recipient is in taxable territory."

✅ Final Answer:
Service tax is NOT applicable, because:

The place of provision = outside India (Rule 4, POPS Rules),

Section 66B applies only to services provided in taxable territory.

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