We are providing database service to one of our clients who are in India however, their centralized procurement office is in UK. Hence, we need to raise invoice in favor of XYZ - UK in Euros and XYZ - UK will pay us in Euros. The services are being rendered in India as well as the services are being used in India by XYZ - India.
Please let us know if we need to include Service Tax on Invoice. If yes, on what Rate?
Hi Mr.Agarwal,
The currency denomination in invoice is irrelevant to determine whether service tax attracts or not, the prime criteria is to check the taxability of the activity carried out.
Section 67A read with rule 11 of the Service Tax Rules, 1994 -
Rate of exchange for determination of value of taxable service shall be the applicable rate of exchange as per the generally accepted accounting principles on the date when point of taxation arises in terms of the Point of Taxation Rules, 2011.
Hence, you have to apply rate of exchange as per GAAP as on the date when point of taxation arises on the activity carried out, if the same is taxable.
Gupta Sachdeva & Co. Chartered Accountants
New Delhi
CA Final
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