Service tax liability if foreign company is service provider

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Kartikeya Mohata

Student

24 Points Joined March 2016

Foreign Company provides maintenance service to indian company. The foreign company does not have any representative in india. the entire consideration is received by foreign company in USD outside India. Is there any service tax liability? How and from whom service tax will be collected?

Replies (2)

Usha Jain

Consultancy team

33 Points Joined February 2016

As per Notification No 30/2012 - ST dated 20.06.2012, if a serivce is provided or agreed to be provided by a person situated in non-taxable territory and received by any person who is located in the taxable territory in such case the service receiver is liable to pay service tax on full taxable value.

To determine the location of serivce provider Place of Provision of Service Rules, 2012 to be referred.

Dipjyoti Majumdar

CA in service & CS. dipmaj@

3489 Points Joined June 2011

It appears as per the limited facts given here that place of provision of service is as per default rule 3. Under this rule, the place of provision of maintenance service is generally the location of service receiver.

Therefore, the receiver has to pay full 14.5% service tax under reverse charge basis to Govt of India.

If the maintenance services are relatable to any immovable property, and the relation be very direct then location of the immovable property would be the place of provision of service. If the place of provision is outside India, no service tax.

Regards,