Our client "A" is providing software maintenance services to an Australian company "B". The same is covered in export of services hence exempt from services tax. However A is paying professional fees to "C", a software professional located outside india for providing services on behalf of A. Is our client liable to pay service tax on reverse charge or is there any exemption which can be claimed.
Yes. Your Client has to pay Service Tax on Services availed and payment made to a C software professional located outside India though you are exporting the services. But you can claim refund of the Service Tax paid on remittance made to C as well as services utilised in India for exporting the Services as per the provisions of the Act and notifications.
I agree with Mr. Bandekar...
Further, you may refer to Rule 5 of Cenvat Credit Rules for refund or Notification No.39/2012-ST for rebate of cenvat paid in such case.
May I request members to clarify why payment made by A (indian company/resident) to C (foreign national outside India) will attract output service tax in hands of A.
Help by yourselves will be helpful to me.
Regards,
Dear Mr. Gupta,
Professional fee paid for software professional(service provider) located in out side india and also service recipient in located outside india. This activity will not fall under the reverse charge system. The place of provision of a services shall be the location of the service provider. In your case service provider and service recipient both are located in outside india. You have not required to paid service tax for this activity.
CAclubindia
