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Query on Import of Sevices

Narasimhan (Internal Audit) (39 Points)

29 August 2010

Dear all, I have a clarification on import of services.

The Situation is Company A in India has availed services of testing and analysis of ground water from Company XYZ of Singapore.

Under what circumstances, would the service tax is liable to be paid by the Service receipient i.e Company A?

- If the services are perfomed in India??

- Or if the services are perfomed outside India??

My feeling is that after the inclusion of Section 66A , whether the service is performed in India or not, it is taxable in the hands of receipient.

Request your views and comments.

Thanks in Advance.

Narasimhan.J

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2 Replies

u.elango (ceo) (21 Points)
Replied 31 August 2010

sir, this is elango, consultant and doing management consultancy for foreign companies, i am receiving payments in usd, can i treat this as export income and avail exemption from service tax?

Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory) (861 Points)
Replied 31 August 2010

HI,

Dear Elango:

You are providing management consultancy services to the compnaies outside India and receiving payment in convertible foreign exchange i.e USD. Yes your services would be eligible for exemption under export of service rules as you satisfy the conditions set out post 27.02.2010 which are :

i) Provision of such service must be to a recipient located outside India

ii) payment for such service is received by the service provider in convertible foreign exchange.

So enjoy the Service TAx exemton on your services.

@ Narsihmhan:

I think the services mentioned by you comes under the head "Technical Testing and Analyses Service under Sub Clause (zzh) of clause (105) of section 65 of the Finanve Act.

According to Rule 3 (ii) of Taxation of Services ( Provided from outside India and received in India ) Rules 2006 for the services under sub clause ...... (zzh).....it would be imaterial whther the service is performed in India or outside India or partly performed in India and partly outside. The service shall be taxable inthe hands of Receipient In india and import of service .

Your observation right but it should be subject to perusal of above rules.

Regards

Jeevesh Mehta

Taxation & Corporate Law Consultant

Ph: 9811617186

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