Go AD-Free with CAclubindia Pro and Daily Mobile Updates. Subscribe Now!

Service tax on technical services rendered abroad?

Sakshi (Proprietor) (30 Points)

14 November 2016

Please share your opinion on levy of service tax in the below mentioned scenario : A. Subsidiary Company in India providing back end technical services to Group Company OUTSIDE INDIA. B. Bill raised by Indian Company to it's group Company for Technical Services in India. C. Will Indian Company charge service tax by considering Proviso to Place of Proviso Rules - Online information and database access/retrieval service or will PLACE OF PROVISION RULES APPLY? Please suggest whether service tax will be charged by Indian Company/LLP or not.

Reply
Follow
Share

2 Replies

Madhukar N Hiregange (Chartered Accountant) (39039 Points)
Replied 14 November 2016

The nature of service provided determines whether it is considered ot have been provided in India or exported. Place of immovable propeprty, perfromance of service, place of event and other rules apply.

The technical services under the present POPSR could come under rule 3 - default rule as it is a business support type of outsourcing. Depending on the recipeint tax is determined. Therefore where recipeint is outside India not liable to ST.

Under GST as per the place of supply rules also they would be said to be outside India.

Sakshi (Proprietor) (30 Points)
Replied 14 November 2016

Many thanks Sir. I understand business outsourcing falls under Rule 3, however, would it be possible to throw light on Rule 9 of POPSR. Does service of online information and database access or retrieval services fall under the definition of business outsourcing? In that case what would be the applicability of service tax?