Service tax eligibility for outsourcing services
This query is : Resolved
17 December 2015
I am software development service provider from Pune, Maharashrta. I have a customer in USA to whom
i provide software development services. Initially he used to send me payment in USD but recently he
started paying me in INR. I guess he is still paying in USD but the broker they are using is sending me INR amount through NEFT.
In this case, do I need to charge him service tax? Or is it exempted?
Thanks in advance.
i provide software development services. Initially he used to send me payment in USD but recently he
started paying me in INR. I guess he is still paying in USD but the broker they are using is sending me INR amount through NEFT.
In this case, do I need to charge him service tax? Or is it exempted?
Thanks in advance.
19 December 2015
If you are providing service to US client and raising invoice on US client in US Dollars then you are exempted from service tax.
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21 December 2015
Thanks for the response!
As you said the client is in US and I raise invoice in USD. He usually send me USD which I convert into INR before it is transferred into my current account. But this time I received the amount as NEFT in INR. Company does not have any office in India, hence i believe their banker or broker may have transferred USD to their account in India and then from there they transferred INR to my account using NEFT.
My personal CA is not aware of service tax laws related to Information Technology services and he is saying that I will have to pay service tax for this transaction.
If you could please point me to any article/section about this law it would be helpful to understand it better.
Thanks a lot in advance!
As you said the client is in US and I raise invoice in USD. He usually send me USD which I convert into INR before it is transferred into my current account. But this time I received the amount as NEFT in INR. Company does not have any office in India, hence i believe their banker or broker may have transferred USD to their account in India and then from there they transferred INR to my account using NEFT.
My personal CA is not aware of service tax laws related to Information Technology services and he is saying that I will have to pay service tax for this transaction.
If you could please point me to any article/section about this law it would be helpful to understand it better.
Thanks a lot in advance!
21 December 2015
Receipt of money in INR will not attract service tax if you are providing a service to client out side India. Taxable territory for service tax is India except J&K. No service tax payable on any service provided outside the taxable territory. For article refer www.taxguru.in.
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