Doing business with a us company for their india office

For Service Tax :when service is provided outside india (US in current case)...payment liability is on service provider...you must calculate gross amount of USD bill into INR...and pay service tax.

I dont know about VAT provisions for exports of material and waiting for another answer.

Thanks and Regards.

Thanks for the info.

Tax benefit is not is question here, client is willing to pay the local taxes (though in USD).

However my main concern is, if this is legal transaction?

i.e. Accepting a PO from US company in USD -> Delivering equipment and services in India -> Invoice the US client in USD including local taxes, i.e. VAT, Service Tax & Octroi in this case.

Thanks,