Bpo services

Queries 803 views 2 replies

himani sharma

Student CA Final

27 Points Joined November 2013

suppose a foreign company is outsourcing its work through soft copies and company situated on india does the work given by the company and sent it to the foreign company through soft copies.

in this case what is the place of provision?

as per rule 9 of place of provision rule" Online information and database access or retrieval services" place of provision will be the place of service provider. so as per this rule indian company is taxable.

but

on the other hand Export of service (Rule 6A of ST Rules)

Any service provided or agreed to be provided shall be treated as export of service when,-

(a) the provider of service is located in the taxable territory ,

(b) the recipient of service is located outside India,

(d) the place of provision of the service is outside India,

(e) the payment for such service has been received by the provider of service in convertible foreign exchange, and

(f) the provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 2 of clause (44) of section 65B of the Act

under point d) condition is mentioned that the place of provision of the service is outside India then such exemption is to be availed..

what place should be taken as place of provision ?????????????????????????????????????

and liable to service tax at which place?????????

Replies (2)

Niral Gangar

Management Consulting Investment Adviso

100 Points Joined February 2008

Dear Himani,

The place of provision of service is in India as the work done is in India. Merely transferring by soft copies does not make provision of service outside India. You can go through the below mentioned details for further reference

Rule 14 of Place of Provision of Service Rules states that later rule prevails over earlier rules. Thus, rules apply in reverse order.

Place of Provision of Service Rules make specific provisions in respect of certain specified services – (a) banking company, FI to account holders, online information and database access or retrieval services, intermediary of services, hiring of means of transport upto one month (rule 9) (b) goods transport services (rule 10) (c) passenger transportation (rule 11) and (d) Services provided on board a conveyance (rule 12)

These rules in respect of these specific services prevail over other rules. In case of all other services, the rules will apply in following sequence -

· Place of Provision of Service is taxable territory where both service provider and service receiver are in taxable territory, except the specified services covered under rule 9 to 12 above [Rule 8]
· Place of Provision of Service is taxable territory if services covered under rule 4, 5 or 6 are provided even partly in taxable territory [Rule 7]
· In case of services relating to event, Place of Provision of Service is where the event is actually held [Rule 6]
· In case of services directly in relating to immovable property, Place of Provision of Service is where the immovable property is located or intended to be located [Rule 5]
· In case of performance based services (relating to goods), Place of Provision of Service is where service is actually performed (except where goods are temporarily imported in India for repairs, reconditioning or re-engineering for re-export) [Rule 4(a)]
· In case of performance based services (where physical presence of service receiver or person acting on behalf of recipient of service is required), Place of Provision of Service is where service is actually performed [Rule 4(b)]
· In all other cases, Place of Provision of Service is the location of service receiver [Rule 3]
· If service does not fall under any of rules 4 to 12 and location of service receiver is not available, location of provider of service is the place of provision of Service [Proviso to rule 3]

himani sharma

Student CA Final

27 Points Joined November 2013

So in my case my service is to be covered under rule 4 or rule 3 becos If rule 3 is to be followed by me then the place of provision will be outside india or If the location of receiver is not identified then it should be the place of provision should be service providers place ie india