Place of provision rules

 Dear Members,

 

As per Rule 7 of Place of Provision Rules,

Place of provision of services provided at more than one location.-Where any service referred to in rules 4, 5, or 6 (Performance based services, immovable property related services and event based services) is provided at more than one location, including a location in the taxable territory, its place of provision shall be the location in the taxable territory where the greatest proportion of the service is provided.

 

According to this rule, if for ex. 10% of work is done in India, and rest of the work is done abroad, does that mean that entire 100% shall be taxable in India even though majority of the work is performed outside India???

 

If this is the actual rule, there will be a  massive impact when compared to the earlier Export of Service Rules.

 

Pls clarify in this regard.

Replies (1)
Yes you are correct, basically the intention of the law makers was to reduce the way of exempting the service received by an Indian MNC in relation to services outside India. Hence, they have come up with amendment whereby taxing a transaction which may or may not have been provided in India or completely in relation to an asset in India.

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