Service tax applicability

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We are a IT startup firm sourcing IT Development services from an US based company. They are billing us in US $ currency and the payment is being made through our bankers. Are the payments liable for Service Tax? PS: I am aware that the bank charges Service Tax for the currency conversion, but then on the overall bill submitted by our IT outsourcer, is there any implication of Service Tax?
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yours's is a case of import of service . yes you are liable to pay swervice tax on service received by you in india as you have permanent establishment in india and your service provider is outside india and having permanennt establishment over there.

please read following para foir further guidence and clarification.

 

Import of service:There is noconcept as 'import' of service in the strict sense of the term in the Finance Act, 1994 or the rules made there under. Here the word 'import' is used just to indicate service provided by a person who has established his business or has his permanent address outside India and the recipient of such service is such a person who has his permanent address or usual place of business in India.

 

      Provisions made under section 66A of the Finance Act, 1994 provide for payment of service tax by the recipient of service in cases where the provider of taxable service is from outside  India  and the receiver of service has his permanent address / usual place of business in  India . This is applicable even though the service is received / consumed by the such Indian outside  India . This provision is not applicable in case of individuals who have received such service other than for the purpose of use in business or commerce.

you can check it on following link also . its gov website.https://www.cbec.gov.in/htdocs-servicetax/st-proc-home

 

 


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