Service tax on company in america

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 February 2013 Hi,
We have a company in America and we have a proprietorship in india as well. We are providing remote services ( IT services)in india to our USA company clients. We are paying the employees in india for that services to USA clients.
My question is do we need to raise the invoice against our company in America for the services (remote services) we are rendering to their clients in USA from india.
will it attract service tax also ?
Is there any other option available rather than raising an invoice to get the money back in India for the services rendered to american client?

Thanks in Advance.

Kaushik Vinod

Kaushik Vinod (Expert)
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13 February 2013 Simple Reimbursement of expenses is not covered in ambit of Service tax.
Rather then Invoice you sud issue debit note and collect the amount as reimbursement from that Company.

The money can be recovered by way of debit note.

Thanks

Querist : Anonymous

Querist : Anonymous (Querist)

13 February 2013 Thanks for the reply.

But the debit note is for what?
For Remote Services Rendered.

Kaushik Vinod

Kaushik Vinod (Expert)
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14 February 2013 Yes for the reimbursement of the expenses

Querist : Anonymous

Querist : Anonymous (Querist)

15 February 2013 But isn't it that service tax is exempt on foreign services.

Asha Kanta Sharma online

Asha Kanta Sharma online

(Expert)
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24 July 2025 Hey! Let me clarify the situation around **service tax on IT/remote services provided from India to US clients**:

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### 1. **Is service tax applicable on IT services provided to foreign clients?**

* Under Indian service tax law (pre-GST), **services provided to a client outside India are generally considered as "export of services"**.

* Export of services is **exempt from service tax**, provided the service meets certain conditions such as:

* The supplier of service is located in India.

* The recipient of service is located outside India.

* The place of supply is outside India.

* Payment for service is received in convertible foreign exchange or Indian rupees wherever permitted.

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### 2. **Should you raise an invoice to the US company?**

* Yes, it is **advisable to raise a proper invoice** for the remote IT services rendered to the US company.

* The invoice will serve as proof of export of services.

* Service tax should **not be charged** on this invoice because it’s an export of services.

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### 3. **What about the proprietorship in India and getting paid?**

* Your Indian proprietorship raises invoice to the US company for services rendered.

* The payment can be received in India in foreign currency or rupees (as allowed by RBI).

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### 4. **Is issuing a debit note instead of an invoice a good idea?**

* A **debit note** is typically issued to increase the amount in the original invoice or adjust payments; it’s not a substitute for invoicing your service.

* If you are actually **providing services** (not merely reimbursing expenses), a proper invoice should be issued.

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### 5. **Summary:**

| Aspect | Recommendation/Info |
| ------------------------------------ | ------------------------------------- |
| Service tax on export of IT services | **Exempt, no service tax payable** |
| Invoice to US company | **Yes, raise invoice for services** |
| Debit note | Not suitable for main service charges |
| Payment receipt | Can be in foreign exchange or INR |

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### So basically:

* You **should invoice the US company** for the IT services.

* The services qualify as **export of services** and are **exempt from service tax**.

* You do **not** have to pay service tax on these exports.

* Make sure to comply with RBI regulations for receipt of foreign exchange.

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If you want, I can help you draft a sample invoice or explain documentation required to prove export of services.

Does that help clear things up?

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