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Service tax on export of software if not relaised

divya (Article assistant) (106 Points)

02 February 2013

Hi,

I know that service tax is not applicable for export of software in India. According to the RBI guidelines exports must be realised within 12 months and there is also some extension of time... Is there any consequence on non realisation of the same and will service tax become applicable if the exports are not realised within time???

Please clarify on the same.

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3 Replies

C.V.R.SARMA (SERVICE) (90 Points)
Replied 02 February 2013

A service is said to be exported only if the consideration is received in convertible foreign exchange within the specified time. If the foreign currency is not received, then it is not exported and it should be treated as provided domestically and attracts service tax with interest.

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divya (Article assistant) (106 Points)
Replied 05 February 2013

Thanks Sharma sir. Can u please quote the relevant section for your explanation since i need to prepare a report on this. I searched for the same but couldnt trace it. Expecting your reply ASAP.

Thanks in advance.

V.Rajalakshmi (proprietrix) (65 Points)
Replied 05 February 2013

Dear Divya

There was a major change in rule 7 of POT rules in the last budet , Export of service is now governed by rule 6A of service tax rule 1994 and if you carefully read that there are 7 conditions to be satisfied to clasify a service as export service and collection of foriegn currency with in specified period does not appear to be a pre condition. though the same was part rule 7 in earler POT rule and the same is not specified even in POT rule 7. Payment foreign currency with 6 months for import of service is still available in rule 7 of POT.