Service tax on hr management comany providing serivce abroad

Queries 547 views 6 replies

Naveen Sharma

Article Assistant

36 Points Joined November 2015

Hi..

I are working with an Human resource management company. We came into an agreement with an foreign company for recruitment of employee for it indian branch and all the fee will be paid by such foreign company itself and invoice will be issued on such foreign comany.

I read service tax receiver defintion and also go through with place of provision of service tax and i have created doubt regarding service tax liablity.

Kindly reply on above querry!

Regards

Naveen

Replies (6)

JAGANATHAN R ACMA, SAP(Fi-Co)

Manager Accounts and Finance

916 Points Joined July 2012

You have to pay the service tax as per the reverse charge system

Naveen Sharma

Article Assistant

36 Points Joined November 2015

Thanks for the reply But sir this is not a case of reverse charge because we are providing service and as per place of provision rule 3 (general rule) place of provision shall be place of service receiver i.e foreign country and in this case service tax shall not apply in this case . Kindly provide some supporting provision for your views. Thanks Naveen

Karthik.V.Kulkarni

Chartered Accountant

594 Points Joined December 2012

Locatiob of service recepient is not in foreign kindly go through rule 2 (i) of POP rules as there is a fixed establishment in india and the said branch is location of service recepient. Thus you have to pay tax on said service.

Naveen Sharma

Article Assistant

36 Points Joined November 2015

Thanks Kartik for reply

But Branch is located in india but the main company on which i will raise invoice is in suppose USA. and the paymeny will be come from USA not from indian branch.

that why i am saying that service provider is in non taxble tarritory i.e. USA.

Thanks

Karthik.V.Kulkarni

Chartered Accountant

594 Points Joined December 2012

As per sec 65b ( 44) establishment in taxable territory and establishment in non taxable territory are deemed distinct persons. Now as branch is a seperate entity and is a fixed establishment directly connected with receipt of services the POP will be in India. For POP place where service is performed is important the issuing of inovice is immaterial.