Service tax on export of services

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

28 November 2014 Dear Sir
We have a contract with Europe Company. but services rendered in India for his client.

The scope of work under contract is to provide consulting services.

Kindly advice that whether we have to charge service tax to Europe Compay under which rule.

Thanks & Regards
Manoj

Querist : Anonymous

Querist : Anonymous (Querist)

01 December 2014 Request to anyone for reply.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Hi Manoj,

Regarding **service tax on export of services** where you provide consulting services to a European company but the services are rendered in India, here’s a detailed explanation:

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### 1. Definition of Export of Services (Section 65B(44))

For a service to qualify as **export of service**, the following conditions must be met:

* The service provider must be located in India.

* The recipient of the service must be located outside India.

* The place of provision of service is outside India.

* The payment for such service must be received in convertible foreign exchange or in Indian rupees wherever permitted by RBI.

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### 2. Place of Provision of Services Rules (POPS), 2012

* The **Place of Provision of Services** determines whether service tax applies or not.

* For **consulting services**, place of provision is generally where the **service provider is located** unless the services relate to immovable property or events.

* However, under **Rule 3(4)(ii)** of POPS Rules, if the recipient is located outside India and payment is received in convertible foreign exchange, the service qualifies as export.

* The place of provision of service should be **outside India** to qualify as export and be exempt from service tax.

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### 3. Your Situation: Services rendered in India for a foreign client

* Since the services are physically performed in India, but the client is outside India, and payment is in foreign exchange, this is typically treated as an **export of service**.

* This means you **do not charge service tax** on the invoice to the foreign company.

* You can **claim exemption** under **Notification No. 6/2012-ST** (as amended), which exempts export of services from service tax.

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### 4. Important Points

* Ensure **payment is received in convertible foreign exchange** and not in Indian rupees (except if allowed by RBI).

* Maintain proper documentation like contract, invoices, bank receipts for foreign remittance.

* File your service tax returns properly indicating export of services.

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### 5. Summary Table

| Condition | Your Case | Taxability |
| ----------------------------- | ---------------------------- | ------------------------------ |
| Service provider in India | Yes | Yes |
| Recipient outside India | Yes | Export |
| Place of provision of service | Outside India (as per rules) | Export |
| Payment in foreign exchange | Yes | Export |
| Service tax chargeable? | No | Exempt under Notification No.6 |

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### Recommendation:

* You **should not charge service tax** to the European company for consulting services exported.

* Ensure compliance with export documentation and reporting.

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If you want, I can help draft the invoice format mentioning “Export of services – Service Tax not applicable as per Notification No. 6/2012-ST.” Would you like that?

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