import of service tax

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

22 November 2009 1. an entity in India is receiving the service of a marketing agency in UK, for the purpose of marketing its goods in UK. whether the entity in India is supposed to pay the service tax under reverse charge mechanism? why?

2.an entity in India is making payment to an event manager in Germany for the purpose of exhibiting its goods in Germany's exhibition. whether the entity in India is supposed to make the payment of service tax under the reverse charge mechanism? why?

Sunil

Sunil (Expert)
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22 November 2009 1) You have to pay as the services are being used for the Business in India.
2) Same as above.

If you are debiting your P/L A/C for business in India, you have to pay service tax on invoice value before applying TDS. Both services attract TDS at Rates per DTAA for Technical (incl. Managerial) Services. If rate is below 20%, in absence of PAN you have to deduct 20%. If you intend to bear the TDS your self then it is 25%. Finally you will land up paying service tax on invoice value + TDS you bear from your pocket.