Service tax Applicability on service recd from foreign co.

Dear All,

A foreign party has raised a bill for professional services rendered to us from outside india.

Kindly clarify, whether service tax payment is applicable for services received from foreign party from outside India, The foreign party has no place of business in India.

If applicable then under which rules / clause, and what is the rate of service tax.

Regards

Vinit Baid

 

Replies (2)

Dear vinit Baid,

                     In  exercise of the powers conferred by Section 93 & 94 read with Section 66A of the Finance Act,1994,the Central govt. has made the Taxation of Service(Provided from Outside India and Received in India),Rules,2006.

             According to Clause (105) of Section 65 of the Finance Act,1994(subject to Section 66A),services received from outside is subject to Service tax in the hands of service receiver.

Regards,

Sadiq Hussain

CA-Final

You have to pay the Tax as Reverse Charge

Assuming the foreign remittances as 87.64, considering 12.36 % tax.

 
Example: If you pay 100 Rs the tax liability comes to   100/87.64*12.36 = 14.10

 

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