Service Tax

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Jyoti (Querist)
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05 July 2009 Dear Sir,

Generally I used to visit your website and study myself to get knowledge; I have one small question which I am facing right now in my organization.

A Foreign company established in USA got short time assignments in India from State Government; now foreign company wants to work with one of Indian company registered in India.

So one of the expatriate of foreign company will stay in India for the assignments.

Indian company will provide manpower & infrastructure like part of our office building / internet / vehicle / communication / printing & stationery / Guest house etc for the completion of the assignments.

Therefore agreement will be made under two heads (a) Remuneration (b) Reimbursable Expenses / Operating Expenses.

Now my question is:

1) Should we invoice in Indian Rupees or US dollar.
2) Service tax will be applicable or not. If applicable then on what remuneration / Expenses or both.
(one point to be borne in mind: that Indian company will not be in positions to provide bills for the expenditure because they will be using part our office building / vehicle etc, so Indian company will charging Lump sum(LS) per month.

Please help me, expecting a line feedback from you sir,

Respects

Jyoti
jsahoo@sify.com

CA. B.SRINIVASULU

CA. B.SRINIVASULU (Expert)
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05 July 2009 Indian company has to bill on foreign company. Lumpsum is allowed and if both the companies are related companies, the charges should fall in line with tranfer pricing rules.

Service tax will be applicable since the serivce provider is in India and servicce is being used in India.

The amount you bill to your foreign partner is basis for collecting your service tax.