Service tax exemption on services

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Vinay Kumar M

Asst. Manager - Accounts

21 Points Posted on 25 June 2012

Dear All

have general query relating to service tax / Income tax.

One Indian private ltd., company is working for outside country and every time it's geting remittence from foreign currency and it's exempt from tax.

if one time Indian company get amount from Indian rupees for their foreign services (example - bill raised to Foreign company for Services but foreign company had arranged amount through their Indian company). bank to bank transfer.

does it effect to Indian service tax / Income tax ?? if answer is yes then how ??

pls. help on urgnet basis....

thanks in advance.....

Replies (3)

Dipjyoti Majumdar

CA in service & CS. dipmaj@

2886 Points Posted on 25 June 2012

If you have received money from Indian arm of the foreign company to whom you had exported services and did not pay output service tax as export of services are outside the levy net, rule 3(2) of export of services rules 2005 has not been complied with. So, the export of service will be deemed to be domestic service rendition and output tax laibility arises.

Also you need to pay interest.

However, this can be doen by Cenvat credit utilisation.

Regards,

Prateek Agarwal

Sr. Executive - Finance & Accounts

1846 Points Posted on 25 June 2012

agreed with Dipjyoti

RENGARAJ R.K

ADVOCATE

6456 Points Posted on 25 June 2012

To claim exemption under export of services, the first condition is receipt of the proceeds in foreign currency. And hence the income in INR will attract service tax.

rengaraj r.k