Taxability of Service to Foreign Co.
This query is : Resolved
28 August 2010
Whether Service Tax is payable by the Company providing Services in India as well as abroad in following cases:-
1. The Service Charges for Service in India is below Rs. 10,00,000/-, however, the Service Charges for Service outside India is more than Rs. 10,00,000/-
2. Whether the Service Charges for Service outside India is altogether exempt ?
1. The Service Charges for Service in India is below Rs. 10,00,000/-, however, the Service Charges for Service outside India is more than Rs. 10,00,000/-
2. Whether the Service Charges for Service outside India is altogether exempt ?
01 September 2010
Exports are not to be reckoned as they are excluded from the calculation.
19 September 2010
a
19 September 2010
a
26 July 2025
Here’s a clear explanation regarding **Service Tax on services provided to foreign companies (export of services)** as per pre-GST rules (Service Tax regime):
---
### 1. **Is Service Tax payable if service charges for services in India are below Rs. 10 lakh but service charges for services outside India exceed Rs. 10 lakh?**
* The **Service Tax exemption threshold** is applicable on **aggregate taxable services provided in India**.
* **Services provided outside India (export of services)** are **outside the scope of service tax** and considered **zero-rated** under Service Tax law.
* Therefore, the value of services provided **outside India** is **not included** for the purpose of determining the Rs. 10 lakh threshold.
* So, **if the service charges for services provided in India are below Rs. 10 lakh, no service tax is payable on Indian services**, regardless of the amount earned from services provided outside India.
---
### 2. **Is service charge for service outside India exempt?**
* **Export of services** (service provided to a person located outside India, and where the place of supply is outside India) is **exempt from service tax** under the Export of Services rules.
* Export of services is treated as **zero-rated supply**, meaning no service tax is charged on the export.
* However, the service provider can **claim input credit** of service tax paid on inputs and input services used to provide such export services.
---
### Summary Table
| Situation | Service Tax Applicability |
| -------------------------------------------------------- | ------------------------------------------------------- |
| Services provided **in India** below Rs. 10 lakh | No service tax payable |
| Services provided **outside India** (export of services) | Exempt / zero-rated (no service tax payable) |
| Total combined turnover (India + outside India) | For threshold, only Indian services turnover is counted |
---
**So, to answer your queries:**
* Service tax is payable only if your **service charges for services provided in India exceed Rs. 10 lakh**.
* Services provided to foreign companies (outside India) are **exempt and treated as zero-rated exports**.
---
If you want, I can help you understand how this applies under **GST**, which replaced service tax from July 2017 onwards. Would you like that?
---
### 1. **Is Service Tax payable if service charges for services in India are below Rs. 10 lakh but service charges for services outside India exceed Rs. 10 lakh?**
* The **Service Tax exemption threshold** is applicable on **aggregate taxable services provided in India**.
* **Services provided outside India (export of services)** are **outside the scope of service tax** and considered **zero-rated** under Service Tax law.
* Therefore, the value of services provided **outside India** is **not included** for the purpose of determining the Rs. 10 lakh threshold.
* So, **if the service charges for services provided in India are below Rs. 10 lakh, no service tax is payable on Indian services**, regardless of the amount earned from services provided outside India.
---
### 2. **Is service charge for service outside India exempt?**
* **Export of services** (service provided to a person located outside India, and where the place of supply is outside India) is **exempt from service tax** under the Export of Services rules.
* Export of services is treated as **zero-rated supply**, meaning no service tax is charged on the export.
* However, the service provider can **claim input credit** of service tax paid on inputs and input services used to provide such export services.
---
### Summary Table
| Situation | Service Tax Applicability |
| -------------------------------------------------------- | ------------------------------------------------------- |
| Services provided **in India** below Rs. 10 lakh | No service tax payable |
| Services provided **outside India** (export of services) | Exempt / zero-rated (no service tax payable) |
| Total combined turnover (India + outside India) | For threshold, only Indian services turnover is counted |
---
**So, to answer your queries:**
* Service tax is payable only if your **service charges for services provided in India exceed Rs. 10 lakh**.
* Services provided to foreign companies (outside India) are **exempt and treated as zero-rated exports**.
---
If you want, I can help you understand how this applies under **GST**, which replaced service tax from July 2017 onwards. Would you like that?
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