Service tax is applicable or not?

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

04 April 2013 As per Indian Section of Service tax, those employees who are not working in India, they are not required to pay the amount of Service tax .
Is it true?

CA Himanshu Kansal

CA Himanshu Kansal (Expert)
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04 April 2013 The query is not clear in respect of the question of service in the case of employees.
kindly elaborate the query more.

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
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24 July 2025 The statement that employees who are not working in India are not required to pay service tax is partially correct but needs clarification:

Key points:
Service Tax is a tax on services provided, not on employees themselves.
It is charged on the service provider or service recipient depending on the case, not directly on employees.

If an employee is rendering services outside India (say, working from abroad for an Indian company), then generally:

Service tax may not be applicable on that specific service because the place of provision of service rules under Service Tax Act generally consider whether the service is deemed to be provided in India.

According to the Place of Provision of Services Rules (2012):

If the service is provided outside India, service tax is not applicable.

For example, if an employee is working entirely outside India and providing services from abroad, such services may be treated as export of services and are exempt from service tax.

However, if the service is rendered in India or the service recipient is in India and the place of provision is India, then service tax applies regardless of where the employee is located.

Summary:
Employees working outside India may not attract service tax on their services, provided the service is considered to be rendered outside India under place of provision rules.

Service tax liability depends on the nature and place of provision of services, not merely on the location of the employee.

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