TAx and other implication while serving a foreign company
This query is : Resolved
24 March 2010
Facts of The case:
1) We are ABC Pvt. Ltd.(the Company) a Corporate Travel Company. We enter into contracts with corporate and manage their travel requirements as per the contract.
2) XYZ Ltd. is a Swiss Company (The Customer) having a place of business at Chennai in India.
3) The Customer is a big group with many separate legal entities in different countries
4) The Company is entering into a contract with the Customer’s Chennai entity to manage the travel requirements of group companies in 17 countries. The company will manage the travel needs of many group entities however the contract will be with Chennai entity only.
5) Travel requisition will come either from the respective locations/users or from Chennai office of the Customer.
6) Services will be provided from India but will be used outside India.
7) Invoice will be raised by the Company to receptive group entities in different countries directly not through Chennai entity.
8) Payment will be received from respective entities in convertible foreign exchange directly to us.
9) Payment can be done through cards or remittances.
10) While making bookings for the customers, the company will pay to different vendors/consolidators in foreign countries in convertible foreign exchange either through credit cards or through bank remittance..
Queries:
1) Can the company raise invoices in foreign currency to entities with which the Company doesn’t have any contract?
2) What are the tax implications specially service tax and with holding tax.
3) What are the formalities for payment to vendors? Do we need to have contract for paying to vendors or we can pay on the basis of bills/invoices by the vendors ( which may be hotels, Air tickets consolidators or other travel agents in foreign countries.
1) We are ABC Pvt. Ltd.(the Company) a Corporate Travel Company. We enter into contracts with corporate and manage their travel requirements as per the contract.
2) XYZ Ltd. is a Swiss Company (The Customer) having a place of business at Chennai in India.
3) The Customer is a big group with many separate legal entities in different countries
4) The Company is entering into a contract with the Customer’s Chennai entity to manage the travel requirements of group companies in 17 countries. The company will manage the travel needs of many group entities however the contract will be with Chennai entity only.
5) Travel requisition will come either from the respective locations/users or from Chennai office of the Customer.
6) Services will be provided from India but will be used outside India.
7) Invoice will be raised by the Company to receptive group entities in different countries directly not through Chennai entity.
8) Payment will be received from respective entities in convertible foreign exchange directly to us.
9) Payment can be done through cards or remittances.
10) While making bookings for the customers, the company will pay to different vendors/consolidators in foreign countries in convertible foreign exchange either through credit cards or through bank remittance..
Queries:
1) Can the company raise invoices in foreign currency to entities with which the Company doesn’t have any contract?
2) What are the tax implications specially service tax and with holding tax.
3) What are the formalities for payment to vendors? Do we need to have contract for paying to vendors or we can pay on the basis of bills/invoices by the vendors ( which may be hotels, Air tickets consolidators or other travel agents in foreign countries.
30 March 2010
As the tour/travel services are provided outside India, there is no service tax payable on this.
The problem may arise in case of making payment to vendors- in certain cases service tax liability under reverse charge method may arise.
The problem may arise in case of making payment to vendors- in certain cases service tax liability under reverse charge method may arise.
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