Foreign remittance
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
15 January 2010
My Company is having software business incurring some expendiure on advertisment in respect of business promotion and other party Charged service tax on the same. I make the payment for the same. The foreign Company after some time remitt some expenditure in foreign currency to me not to other party in respect of such expenditure. I have the folloing query on the above case:
1. Should I charged the sevice tax on the foreign remittance to foreign country
2. Is any other way to secure from Service tax applicable
1. Should I charged the sevice tax on the foreign remittance to foreign country
2. Is any other way to secure from Service tax applicable
15 January 2010
The type of foreign service whether taxable or not is the first step. If it is then reading and finding out whether it is so under the payment to Non Residents from India Rules to be examined.
If liable then payment to be made and credit availed. The credit is to be used for payment of ST on doemstic services. If no such services or negligible amount then refund of accumulated tax under Rule 5 of cenvat credit rules or Notification udner the Export of Servic eRules to be applied for.
If liable then payment to be made and credit availed. The credit is to be used for payment of ST on doemstic services. If no such services or negligible amount then refund of accumulated tax under Rule 5 of cenvat credit rules or Notification udner the Export of Servic eRules to be applied for.
Querist : Anonymous
Querist :
Anonymous
(Querist)
15 January 2010
Sir thanx for reply but I am still have certain missunderstaindings
My question is only that should my company charged any service tax on the amount reimburse by the foreign company in the foreign exchange and deposit the same to goverment.
As per my query no third party is included only my company & foreign company who reimburse the amount is included.
sir as per my opinion I am not rendering any service to foreign company. foreign company make payment to me to only share the part of such expenses. I pay the service tax in india on advertising service to service provider,
Sir now tell should I still liable to charged service tax on the foreign company.
Please provide the reliable source for the same
Sir if I charged the service tax on the foreign remittance it is double charging of service tax.
for examle If advertisment exp is Rs. 100000 and service tax on the same is Rs.10300 and I pay to service provider Rs.110300 immediatly and I debit Rs. 110300 in my p & L a/c.After 10 days foreign company pay me rs. 50000 in respect of such service which i credit in my P & L a/c. Now tell should I charge ST on Rs. 50000 (Rs. 5150) and demand Rs. 5150 more
My question is only that should my company charged any service tax on the amount reimburse by the foreign company in the foreign exchange and deposit the same to goverment.
As per my query no third party is included only my company & foreign company who reimburse the amount is included.
sir as per my opinion I am not rendering any service to foreign company. foreign company make payment to me to only share the part of such expenses. I pay the service tax in india on advertising service to service provider,
Sir now tell should I still liable to charged service tax on the foreign company.
Please provide the reliable source for the same
Sir if I charged the service tax on the foreign remittance it is double charging of service tax.
for examle If advertisment exp is Rs. 100000 and service tax on the same is Rs.10300 and I pay to service provider Rs.110300 immediatly and I debit Rs. 110300 in my p & L a/c.After 10 days foreign company pay me rs. 50000 in respect of such service which i credit in my P & L a/c. Now tell should I charge ST on Rs. 50000 (Rs. 5150) and demand Rs. 5150 more
25 July 2024
Based on your query regarding the service tax applicability on foreign remittance received for advertisement expenses, here's the clarification:
1. **Service Tax Applicability on Foreign Remittance:**
- Service tax is applicable on services provided in India, including advertisement services. When you pay the service tax to the Indian service provider for the advertisement services, you are fulfilling your liability under Indian tax laws.
- When the foreign company reimburses you for a portion of these advertisement expenses, this reimbursement is not for services rendered by you to them but is a reimbursement of the expenses you incurred.
2. **Position on Service Tax:**
- According to the Indian tax laws, service tax is levied on the service provider (in this case, the Indian advertisement service provider) for services provided within India.
- Since you are not providing any service to the foreign company directly but are receiving a reimbursement of expenses, you are not required to charge service tax on the reimbursement amount received from the foreign company.
3. **Double Taxation Concerns:**
- Charging service tax on the foreign remittance would indeed lead to double taxation, which is not intended under Indian tax laws. The service tax is already paid by you to the Indian service provider, and the reimbursement from the foreign company should not attract additional service tax.
4. **Documentation and Compliance:**
- It is important to maintain proper documentation to substantiate that the remittance received from the foreign company is a reimbursement of expenses and not for any services provided. This documentation will be crucial in case of any tax scrutiny or audit.
5. **Reliable Source for Clarification:**
- The definitive source for understanding service tax provisions in India is the Finance Act and related notifications issued by the Central Board of Indirect Taxes and Customs (CBIC). For specific queries and clarifications, consulting with a tax advisor or chartered accountant who specializes in indirect taxes would be advisable.
In conclusion, based on the nature of the transaction described (reimbursement of advertisement expenses), you should not charge service tax on the amount reimbursed by the foreign company. This approach aligns with Indian tax laws and prevents double taxation on the same transaction.
1. **Service Tax Applicability on Foreign Remittance:**
- Service tax is applicable on services provided in India, including advertisement services. When you pay the service tax to the Indian service provider for the advertisement services, you are fulfilling your liability under Indian tax laws.
- When the foreign company reimburses you for a portion of these advertisement expenses, this reimbursement is not for services rendered by you to them but is a reimbursement of the expenses you incurred.
2. **Position on Service Tax:**
- According to the Indian tax laws, service tax is levied on the service provider (in this case, the Indian advertisement service provider) for services provided within India.
- Since you are not providing any service to the foreign company directly but are receiving a reimbursement of expenses, you are not required to charge service tax on the reimbursement amount received from the foreign company.
3. **Double Taxation Concerns:**
- Charging service tax on the foreign remittance would indeed lead to double taxation, which is not intended under Indian tax laws. The service tax is already paid by you to the Indian service provider, and the reimbursement from the foreign company should not attract additional service tax.
4. **Documentation and Compliance:**
- It is important to maintain proper documentation to substantiate that the remittance received from the foreign company is a reimbursement of expenses and not for any services provided. This documentation will be crucial in case of any tax scrutiny or audit.
5. **Reliable Source for Clarification:**
- The definitive source for understanding service tax provisions in India is the Finance Act and related notifications issued by the Central Board of Indirect Taxes and Customs (CBIC). For specific queries and clarifications, consulting with a tax advisor or chartered accountant who specializes in indirect taxes would be advisable.
In conclusion, based on the nature of the transaction described (reimbursement of advertisement expenses), you should not charge service tax on the amount reimbursed by the foreign company. This approach aligns with Indian tax laws and prevents double taxation on the same transaction.
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