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Importing of services from provider not based on india

Queries 732 views 5 replies

Hi,

My company is based out of only India.

For my marketing activities, I'm hiring freelancers who are based out of ireland, usa, endgland etc. without any local presence.

They provide poster creation, search engine optimization services etc.

Am I liable to pay service tax here for the payment which I'm doing. The payment is happeing via paypal using credit card

Please suggest

 

Replies (5)

If you are receiving the services from a person who is not having a permanent establishment in India, you become the deemed service provider. You are therefore required to obtain registration and pay the service tax on behalf of the foreign service provider.

While remitting the amount to foreign service provider TDS is deducted from the amount payable. for the purpose of Service tax, the taxable value includes this Service Tax. You have to therefore pay service Tax on the gross amount including TDS.
 

Yes, you are liable to pay service tax on import service invoice value under RCM. However, if you are grossing up payments for TDS purpose, service tax needs to be discharged on Net payment amount.

whether for the same cenvat is available??

The services availed from entiies/ persons outside Inida MAYBE liable. This depends on the Place of Provision of Services Rules.

It is important to note that all services are not based on recepient basis. Some exceptions are as under: ( Even if SP is outside India) 

1. Event based services maybe - place of event if in India.

2. Property based services - place of immovable property if based in India.

3. Transportation services - detination if India. ( exemption upto cusotms station available)

4. Intermediary service - place of intermediary.

5. Multi locational Service provision- the place in India ( even if small part in India).

Some others - see good commentary on ST or POPS.

If the service from outside India is taxable on RCM then if used for provding taxable services then cenvat credit is eligible. 

I agree with Madhukar Sir, if the place of provision of service is in India then only the service receiver is liable to pay Service tax under Reverse Charge. Mode of payment is not relevant for this purpose, Nature of service will decide the liability of service receiver.


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