Invoiced to overseas company, paid by office in india

Queries 395 views 2 replies

Ajay Gupta

CEO

25 Points Joined January 2013

Hi,

We provide services to a US company which has offices all over world including one at Mumbai. We invoice them through their online portal and the invoices are generated in the name of office which received the services (for example, Germany, US, Mumbai, etc.). However, the service tax is included only for those invoices which are generated for Mumbai office. All invoices are raised in INR only.

So far it is ok, as Service tax is applicable only for Indian customers. But, the matter gets complicated because all the payments are made by their Mumbai office only. They deduct TDS on all payments.

My questions are:

(1) Is this OK that I do not charge Service tax in my invoice to their overseas offices while they pay through their local office?

(2) Should they deduct TDS at the time of payment for such invoices which were raised for their overseas offices?

My CA is of the opinion that this is not correct. If they deduct TDS then they are liable to pay Service Tax also.

What is the opinion of community here?

Thanks.

Ajay

Replies (2)

Shobhit Goel

Chartered Accountant

101 Points Joined April 2009

Hi,

In my view, you should have to charge service tax if you are getting payment from India.

Because, under Service Tax, this is not a Export of Service. Under Export of Service, Payment must be received from Overseas & documented through FIRC. FIRC is one of the most important proof of Export of Service.

in your case, there is no payment from Overseas, hence no FIRC.

So, you are required to charge proper service tax.

Also, lets see the comments of experts!

Thank you,

Regards,

Shobhit

Prasad

Sr. Manager

617 Points Joined April 2011

Since the payments are received in INR, you should charge ST on all invoices. and the basic preconidtion for your service to called exports is not met as the amounts are not realised in foreign currency.