Live Course on Drafting of Appeal and Reply of Penalty Notice by CA Sachin Sinha. Register Now!!

Export of service?

CA.Varalakshmi.M (Manager-Finance) (482 Points)

17 July 2012

Hi friends,

On behalf of our parent company in US we are providing US recruitment services to company's outside India.Clients make payment directly to our parent comp and we raise invoice to parent company as work order.

My doubt is ...it comes under export of service or work order?

Pls clarify?

Thanx in advance..

Reply
Follow
Share

6 Replies

RENGARAJ R.K (ADVOCATE) (7557 Points)
Replied 17 July 2012

Originally posted by : M.Varalakshmi
	Hi friends, On behalf of our parent company in US we are providing US recruitment services to company's outside India.Clients make payment directly to our parent comp and we raise invoice to parent company as work order. My doubt is ...it comes under export of service or work order? Pls clarify? Thanx in advance..

Please confirm whether you are receiving the amount in Dollars or INR for the services rendered?

rengaraj r.k

Prateek Agarwal (Sr. Executive - Finance & Accounts) (1732 Points)
Replied 17 July 2012

As per PoP rules, the service provision is taking place in a non-taxable territory, hence, not taxable.

Wait for others to clarify.

CA.Varalakshmi.M (Manager-Finance) (482 Points)
Replied 17 July 2012

@ Prateek, how it is a non-taxable territory

@ Rengaraj

Actually my parent company place a work order i.e us recruitment to us

we recruit the persons and raise invoices to parent company .

We receive payment in Dollors only.

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 17 July 2012

For being an export of service these conditions are to be cumulatively satisfied:- It must be a service as defined under sub-section 44 of section 65B • by a service provider located in the taxable territory • to a service receiver located outside India • the service is not a service specified in the negative list • the place of provision of the service is outside India • the payment for such service is received by the service provider in convertible foreign exchange • the service provider and service receiver are not merely establishments of a distinct person by virtue of item (b) of Explanation 2 of clause 44 of section 65B of the Act. Now in light of the said conditions drill down in each point to assess whether the service provided by you are exempted by way of export of service rules or not. Hope now your query will be resolved.

CA.Varalakshmi.M (Manager-Finance) (482 Points)
Replied 17 July 2012

@ ajit kumar

please explain this point.

the service provider and service receiver are not merely establishments of a distinct person by virtue of item (b) of Explanation 2 of clause 44 of section 65B of the Act.

Ajit kumar Dubey (Taxation Manager) (637 Points)
Replied 17 July 2012

In terms of explanation (2) to sub-section 44 of section 65B, an establishment of a person outside the taxable territory is a person distinct from an establishment in a taxable territory. Thus, services provided from overseas are to be carefully judged whether they are being rendered by the establishment outside the taxable territory or within. A. where the service provider or receiver has obtained only one registration, whether centralized or otherwise, the premises for which such registration has been obtained; B. where the service provider or receiver is not covered by A above: i. the location of his business establishment; or ii. where services are provided or received at a place other than the business establishment i.e. a fixed establishment elsewhere, the location of such establishment; iii. where services are provided or received at more than one establishment, whether business or fixed, the establishment most directly concerned with the provision or use of the service; and iv. in the absence of such places, the usual place of residence of the service provider or receiver.

1 Like