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service tax

Arunashree ( Finance Manager) (117 Points)

18 August 2010

Indian company entered into a Joint Venture with a Foreign Company. Indian co. is providing some services to foreign co. & those services are provided in India itself & for those services Foreign co. is paying Commission in foreign currency.

Pl tell whether Indian co. has to raise invoices for those commission including service tax or not. pl reply asap

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3 Replies

Jeevesh Mehta (Advocate- Corporate Commercial & Indirect Tax Advisory) (861 Points)
Replied 20 August 2010

hi,

If the benefit out of such services is derived out of india by the foreignnparty and payment is made in foreign exchange then its would fall under the case of export of services and no service tax is chargiable on it ,

Regards

Jeevesh Mehta

Customs, Excise and Service Tax Consultant

Ph: 9811617186

Ganesh (CA) (111 Points)
Replied 21 August 2010

Dear Wanishree,

Could you plseae provide the details of service rendered.

Thanks,

Ganesh.

S Saravanan (Chief Financial Officer) (473 Points)
Replied 21 August 2010

As per export of service Rules, 2005 services are treated as exported only when conditions as prescribed under Rule 3(2) of such rules are satisfied.

These rules stipulate the following 2 conditions

1. The services should be provided from India but used outside India
2. Payment for such services is received in convertible foreign exchange.

As per your query it is clear that payment is received in convertible foreign currency. The other key condition that the service should be used outside India also needs to be satisfied to be exempt from service tax.

Hope this answers your query.

Regards

S Saravanan

https://ssaravanan-vvu.blogspot.com/