Import of service and payment therof

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AJIT RAJPUT

COMPANY SECRETARY

21 Points Posted on 07 October 2014

Dear Experts,

My client is a proprietaryship firm and importer as well as exporter of Information Technology services i.e website promotional services and all payment he is receiving as well paying through paypal in india rupees form.

query is:

1. whether he can avail servicetax exemption as per export of service rules?if yes thn whether service tax registraion is mandatory in that case?

2. he is also providing work via freelancer site and paying through paypal to freelancers in a country like philipiense, shri lanka and viettnam, inthat case query is no one from anyother country is deducting tds or servicetax and paying exaclty the amount what decided online, so whether my client is in need of to deduct tds and servicetax amount, here let me clear that amount paid to such free lancer is very small amount like 5 $ to 10$ each time but frequecny is very like total 10000$ permonth.Further here in this case in bank statement amount reflects in indian rupees and in statement of paypal account also it doesnt showing that in which country client has paid.

so what indian tax and service tax rules saying in such case.??

Thank You,

CS AJIT RAJPUT

Replies (3)

Kashish Gupta

B.com (H) ACA

268 Points Posted on 08 October 2014

1. For import of services, place of provision of service is at the location of service receiver I.e. India. Hence service tax is leviable and as per notification number 30/2012 this is covered under reverse charge and hence client is required to pay service tax under reverse charge to Central government. He is also exporting service and if the consideration is received in foreign currency then he can take benefit of export of service and can simply Avail cenvat credit of service tax paid under reverse charge and thereafter while filing service tax return can claim refund under rule 5 of cenvat credit rules and for this he has to debit cenvat credit account with amount of refund claimed.

Kashish Gupta

B.com (H) ACA

268 Points Posted on 08 October 2014

For provisions relating to deduction of TDS on payment made abroad refer to section 115a, 44DA, section 195 of income tax act...looking into your case, I think only computer software service taken from abroad will attract deduction of TDS provisions (refer section 9 as amount paid for computer software is royalty now) and TDS is deductible at 25% or rates asper DTAA, lower

or if anything is paid for fees for technical services, that is also covered under 115A.