Service tax on consultancy fees

Mr. Ravin if you received fee in USD then you are exempt from service tax.... but at the same time exchange rate risk also be arise....i will suggest you to invoice in Rs. and pay service tax....

Originally posted by : CA.Ankur Khandelwal
	Mr. Ravin if you received fee in USD then you are exempt from service tax.... but at the same time exchange rate risk also be arise....i will suggest you to invoice in Rs. and pay service tax....

Mr. Ankur, thank you for your reply. I agree to your suggestion however just one more question, if at all I wish to receive the payment in USD, how do I receive it?

As all the banks I contacted said that they will deposit equivalent INR against USD and not actual USD so is there any option for me to receive USD?

Thanks again

you can not hold foreign currency in india... dats y i am suggest that you have to face exchange fluction each and every time of payement......banks are right.

Wait Mr. Ravin,

Please note that there are two ways through which you may not have to pay service tax i.e., either you are exporting services or the service you are providing is an exempt service.

About the second option, I cannot comment as you have not mentioned the nature of service that you are providing, mere consultancy cannot help.

Now about the First option, as per the new Rule 6A(1) of the Service Tax Rules, 1994, you will have to satisfy all the following conditions to claim that your services are export services -

(a)  the provider of service is located in the taxable territory , [you are already in India]

(b) the recipient of service is located outside India [your company is outside India]

(c) the service is not a service specified in the section 66D of the Act, [It is a list of 17 services, which may not be applicable to you, but I cannot comment as I don't know the service you are providing]

(d)  the place of provision of the service is outside India, [It is dependent upon the Place of Provision of Rule, 2012; I can not comment as the nature of service is not specified]

(e) the payment for such service has been received by the provider of service in convertible foreign exchange, and [you should receive it in foreign currency only]

(f) the provider of service and  recipient of service  are not merely establishments of a distinct person in accordance with  item (b) of Explanation 3 of clause (44) of section 65B of the Act. [not applicable to you as you are not an establishment]

Now I would comment as per your queries:

1. Please check whether all the above conditions are satisfied;

2. The condition is to receive the amount in convertible foreign exchange, hence account type is not relevant;

3. If the services provided by you is covered by the exemption notification, then you don’t need to worry about the above conditions, hence no service tax liability.

I suggest you explain in detail the kind of service you are providing, then I can comment comprehensively...