Service tax for services provided to foreign clients

Queries 341 views 4 replies

Kavita Nambissan

CTO

31 Points Joined January 2016

Hello everyone,

I am new to CAclub, and have no Finance background. I am requesting you guys to give me any help possible in solving our current predicament. Any guidance on the right path to follow will also be very helpful.

Our agency provides services to clients based outside India. We are registered for service tax. But as of now we do not charge our foreign clients any service tax, as we believed that our services fall under the Export of Services clause (Rule 6A of Service Tax Rules, 1994). We are a relatively small advertising agency, and most of our clients are based outside India. Paying service tax now, will mean the money goes out of our own pockets, and taxing our clients may cause unwanted friction, as we did not mention anything about a service tax to them when contracts were signed.

I have read here https://www.forum.charteredclub.com/threads/service-tax-on-export-of-services.1080/ about the conditions to be met to qualify as export of services, and we meet all of the conditions. My question here is about the second half of instructions where we are required to submit documentation before the Commissioner "before" export of services. How can we possibly do this every single month for each of our clients? Is there any other way to claim rebate?

Can someone please explain what our best course of action is here? Any links, source material, notification numbers, etc would be highly appreciated.

Regards,
Kavita

Replies (4)

Deepak

Chartered Accountant

254 Points Joined July 2015

Dear Kavita,

Filing Prior declaration in 39/2012 is a procedural requirement. There is not specific format for it. It should be on the estimate basis of actually services to be provided in the future and used along with descripttion of service. It is not practicable to decide in advance which of the service will be provided in future. Department starts rejecting claims by taking shelter of non mentioning of services actually used or to be provided in the declaration. If you are already registered with the service tax department then take the credit of input service and show the same in the ST-3 return and go for refund as per notification no.27/2012-CE provided there are some conditions and safeguards mentioned in the said notification which shall be fulfilled.This method will definitely add some extra cost like CA certificate and record maintenance but chances of getting refund is more in this case. Even this method is one of the easiest method. You can refer Rule 5 of CENVAT credit rules, 2004 and Notification No.27/2012-CE(Non-Tariff) under Central Excise in this regard.

Kavita Nambissan

CTO

31 Points Joined January 2016

Originally posted by : Deepak
	Dear Kavita, Filing Prior declaration in 39/2012 is a procedural requirement. There is not specific format for it. It should be on the estimate basis of actually services to be provided in the future and used along with descriptttion of service. It is not practicable to decide in advance which of the service will be provided in future. Department starts rejecting claims by taking shelter of non mentioning of services actually used or to be provided in the declaration. If you are already registered with the service tax department then take the credit of input service and show the same in the ST-3 return and go for refund as per notification no.27/2012-CE provided there are some conditions and safeguards mentioned in the said notification which shall be fulfilled.This method will definitely add some extra cost like CA certificate and record maintenance but chances of getting refund is more in this case. Even this method is one of the easiest method. You can refer Rule 5 of CENVAT credit rules, 2004 and Notification No.27/2012-CE(Non-Tariff) under Central Excise in this regard.

Thank you for the response Deepak. Not sure I understand all of what you have suggested, but I will take this to a CA to have it explained clearly and put into action. Really appreciate you taking the time to respond.

Nagendra Hegde

Chartered Accountant

1948 Points Joined October 2012

Dear madam,

You may appreciate the fact that In case, even if you dont fulfill all conditions under Rule 6A of STR, as far as place of provision of service rendered by you is outside taxable territory, service tax levy fails and no need to dicharge ST.

Kavita Nambissan

CTO

31 Points Joined January 2016

Originally posted by : Nagendra Hegde
	Dear madam, You may appreciate the fact that In case, even if you dont fulfill all conditions under Rule 6A of STR, as far as place of provision of service rendered by you is outside taxable territory, service tax levy fails and no need to dicharge ST.

Thank you Nagendra, I am feeling a little more optimistic now.