Taxability in india of services provided outside india
This query is : Resolved
GAURAV GOPAL BADWE
(Querist)
25 April 2012
DEAR ALL,
WE HAVE EXPORTED OUR FG ( ELECTRIC MOTORS ) TO OUR CUSTOMER IN CANADA. BUT ON INSPECTION OF OUR FG IN CANADA BY OUR CUSTOMER, HE FOUND SOME DEFECTS WHICH HE RECTIFIED BY DEPLOYING A PERSON FROM CANADA. NATURE OF WORK WAS REWINDING OF MOTORS. WE HAVE PAID THE CHARGES OF REWINDING FROM INDIA TO THE PERSON WHO PERFORMS THE REWINDING WORK IN USD.
NOW WE WOULD LIKE T0 KNOW IS THIS TRANSACTION IS TAXABLE UNDER SERVICE TAX. IF YES WHO SHOULD PAY THE SERVICE TAX AND ON WHAT VALUE.
WE HAVE EXPORTED OUR FG ( ELECTRIC MOTORS ) TO OUR CUSTOMER IN CANADA. BUT ON INSPECTION OF OUR FG IN CANADA BY OUR CUSTOMER, HE FOUND SOME DEFECTS WHICH HE RECTIFIED BY DEPLOYING A PERSON FROM CANADA. NATURE OF WORK WAS REWINDING OF MOTORS. WE HAVE PAID THE CHARGES OF REWINDING FROM INDIA TO THE PERSON WHO PERFORMS THE REWINDING WORK IN USD.
NOW WE WOULD LIKE T0 KNOW IS THIS TRANSACTION IS TAXABLE UNDER SERVICE TAX. IF YES WHO SHOULD PAY THE SERVICE TAX AND ON WHAT VALUE.
CA Nikhil Jhanwar
(Expert)
26 April 2012
In this case service was provided in India as well as service was received in India, I understand that your customer was service receiver in this case. So it is not taxable as import of service in India.
On the other hand since you have made payment for the such rectification in Canada there may be objection from Service Tax Department. As a matter of tax planning rather than showing such payment for rewinding under separate account You should adjust the same from your Sales/Revenue A/C. for this purpose You may receive a debit note from your customer.
On the other hand since you have made payment for the such rectification in Canada there may be objection from Service Tax Department. As a matter of tax planning rather than showing such payment for rewinding under separate account You should adjust the same from your Sales/Revenue A/C. for this purpose You may receive a debit note from your customer.
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