Dear sir, One of the American company importing goods from other countries(not from India). We are the Indian company organizing the shipping services through a registered shipping company in India. Indian shipping company raise invoice on us in USD or in Indian rupees, as per their company rules. In turn we raise invoice on American company with margin, in USD. Kindly let me know the tax implications ( service tax, income tax & TDS) on this transactions pl.
08 October 2014
Dear Sir, As per my view for service tax, No need to pay service tax as it is an export of service. You are providing services out of india and the customer also from out side india, The consideration you are receiving from the american company is in foreign currency, therefore it constitute as export of service. No service tax is leviable.As per rule 6A of service tax rule all the factors under sub-rule (1) (a) to (f) is complying in this case. therefore it is clearly export of service.
08 October 2014
thanks sir for your reply. please let me know further that whether any tax implications arise for mediatory company and indian shipping company, in the sense indian shipping company providing services to mediatory company.
25 July 2024
In the scenario you've described involving transactions between an American company, your Indian company acting as a mediator, and an Indian shipping company, here are the tax implications:
### 1. Indian Company (Mediator) and Indian Shipping Company
**Service Tax / GST (Goods and Services Tax):**
- **Indian Shipping Company**: When the Indian shipping company raises an invoice on your Indian company for shipping services provided, it will typically charge GST (Goods and Services Tax) if the services are provided within India. The rate of GST will depend on the type of shipping service provided and its classification under GST regulations.
- **Mediator (Your Indian Company)**: If your Indian company is registered under GST and the services provided by the Indian shipping company attract GST, you can claim input tax credit (ITC) on the GST paid to the Indian shipping company when you raise invoices to the American company.
**Income Tax:**
- The income earned by the Indian shipping company from providing shipping services to your Indian company will be subject to income tax under the Income Tax Act, 1961. The Indian shipping company will need to comply with Indian tax laws regarding income tax filing and payment.
### 2. Transactions between Indian Company and American Company
**Service Tax / GST (for services provided by your Indian company):**
- **Your Indian Company**: When your Indian company raises an invoice on the American company for the shipping services (with markup), GST may apply if your services are considered taxable under GST. The GST rate will depend on the nature of the service provided and its classification under GST regulations.
**Income Tax (for your Indian company):**
- Income earned by your Indian company from providing mediation services (organizing shipping services) to the American company will be taxable under the Income Tax Act, 1961. Your Indian company will need to declare this income in its income tax return and pay income tax accordingly.
**TDS (Tax Deducted at Source):**
- If payments made by your Indian company to the Indian shipping company exceed specified limits, TDS provisions under the Income Tax Act may apply. Your Indian company may need to deduct TDS at the applicable rates when making payments to the Indian shipping company and deposit it with the government.
### Conclusion
- Ensure compliance with GST regulations for invoicing and claiming input tax credit. - Adhere to income tax provisions for declaring income earned from mediation services. - Follow TDS provisions if applicable based on payment thresholds and rates.
It's advisable to consult with a tax advisor or chartered accountant who can provide specific guidance based on the exact nature of transactions and current tax regulations applicable to your situation in India.
CAclubindia
