Service tax calculation [export vs domestic]

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Sandeep Prabhakaran

Others

34 Points Joined 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! :)

Replies (3)

Sunil Kumar

Indirect Taxation

1246 Points Joined May 2012

Ur not liable to any service tax as u r eligible to claim exemption of Rs 10 lakh. Since ur taxable service is less than Rs10 lakh

Rashmi

CA Final Student

137 Points Joined July 2012

Agree with Sunil

For your reference, section 66B (the charging section) reads that tax shall be levied on value of all services, other than those in negative list, provided or agreed to be provided in the taxable territory. Since exports are services outside the taxable territory, therefore export turnover shall not be considered.

This means that you are not liable to pay service tax on account of being a small service provider.