Service tax calculation [export vs domestic]

Sandeep Prabhakaran (Others) (34 Points)

10 March 2014  

I've researched as much as I could about this, but there seems to be two opinions on this issue:

We're primarily exporting software services which I know is exempted from service tax liability, income is received in foreign currency, services consumed entirely in the US.

However, we also do a bit of work here in India or some of our incoming wire transfers get credited in INR: so my question is, how do I compute service tax if given:

  • Net turnover is 25 lakhs.
  • Turnover via export of services is 18 lakhs
  • Turnover via domestic services is 7 lakhs
  • Should I pay service taxes for the domestic services rendered, for 7 lakhs
  • Or am I not liable to service taxes by claiming the 10 lakh limit?

P.S. a related question, income via oDesk and PayPal although rendered to foreign customers, the final income is received only in INR, so this will not be exempted from service tax although the service is rendered to foreign customers and fully consumed there. Is that correct?

Thanks for reading! :)