Tax on it services outside india
This query is : Resolved
30 October 2013
Hello Sir/Madam,
I am running a website. Many of my friends are also working on this website. I gave them our website's link and they post these link on there facebook page. For all this i have to pay some amount to all of them. My question is, some of friends are outside the india if i pay them, then what tax i need to pay and how much.
I am running a website. Many of my friends are also working on this website. I gave them our website's link and they post these link on there facebook page. For all this i have to pay some amount to all of them. My question is, some of friends are outside the india if i pay them, then what tax i need to pay and how much.
01 November 2013
if you pay outside India then it amounts to Import of services.
you need to pay this amount under reverse charge and hence you will not pay any service tax amount to the person(foreign party) but will directly deposit the amount into government.
NOTE: you cannot utilise your input credit and you have to pay this amount into govt. After paying you can very well use the amount for your other future liability of ST.
you need to pay this amount under reverse charge and hence you will not pay any service tax amount to the person(foreign party) but will directly deposit the amount into government.
NOTE: you cannot utilise your input credit and you have to pay this amount into govt. After paying you can very well use the amount for your other future liability of ST.
06 November 2013
thank you reply,
i want to know how much service tax i have to pay.
i want to know how much service tax i have to pay.
26 July 2025
Hey! Here’s what you need to know about service tax on payments to friends outside India for promoting your website:
---
### Key points:
* **Payments to foreign friends for services** (like posting links on their Facebook pages) are considered **import of services**.
* Under Indian **Service Tax law (before GST)**, when you import services, you have to pay service tax under **Reverse Charge Mechanism (RCM)**.
* This means **you (the recipient in India) pay service tax directly to the government**, not the foreign service provider.
* You **cannot take Input Tax Credit (ITC)** on this tax paid under reverse charge for imported services.
---
### How much service tax to pay?
* The service tax rate applicable before GST was **15% (including Swachh Bharat Cess and Krishi Kalyan Cess)**.
* So, on the amount you pay to your foreign friends, you have to pay **15% service tax under reverse charge**.
---
### Example:
* If you pay ₹10,000 to a foreign friend for services,
* You will pay **₹1,500 (15%) as service tax to the government** under reverse charge.
---
### Important:
* You must **self-assess and deposit this tax**.
* The payment needs to be declared in your service tax returns.
* The foreign party does not charge you service tax; you handle it on your end.
---
If you are under **GST regime now (post July 2017)**, the rules change and you have to pay **IGST on import of services** under reverse charge at applicable rates (usually 18%).
---
Let me know if you want the updated GST rules on this!
---
### Key points:
* **Payments to foreign friends for services** (like posting links on their Facebook pages) are considered **import of services**.
* Under Indian **Service Tax law (before GST)**, when you import services, you have to pay service tax under **Reverse Charge Mechanism (RCM)**.
* This means **you (the recipient in India) pay service tax directly to the government**, not the foreign service provider.
* You **cannot take Input Tax Credit (ITC)** on this tax paid under reverse charge for imported services.
---
### How much service tax to pay?
* The service tax rate applicable before GST was **15% (including Swachh Bharat Cess and Krishi Kalyan Cess)**.
* So, on the amount you pay to your foreign friends, you have to pay **15% service tax under reverse charge**.
---
### Example:
* If you pay ₹10,000 to a foreign friend for services,
* You will pay **₹1,500 (15%) as service tax to the government** under reverse charge.
---
### Important:
* You must **self-assess and deposit this tax**.
* The payment needs to be declared in your service tax returns.
* The foreign party does not charge you service tax; you handle it on your end.
---
If you are under **GST regime now (post July 2017)**, the rules change and you have to pay **IGST on import of services** under reverse charge at applicable rates (usually 18%).
---
Let me know if you want the updated GST rules on this!
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