Can we deduct service tax on payment made to non-resident?
This query is : Resolved
09 October 2012
Can we deduct service tax on payment made to non-resident as sales commission?
As Per "Reverse Charge Mechanism".
Case I:
1. Service Provider: In UK selling our product and we make payment 1% on invoice as sales commission.
2.Service Receiver: In India IMI(Export) Partnership Firm
Case II:
1.Service Provider: In UK selling our product and we make payment 1% on invoice as sales commission.
2.Service Receiver: In India(SEZ) TTE(Export) Partnership Firm
Note:Activities done in UK in both the cases.
I am little bit confusion, please solve this query.
As Per "Reverse Charge Mechanism".
Case I:
1. Service Provider: In UK selling our product and we make payment 1% on invoice as sales commission.
2.Service Receiver: In India IMI(Export) Partnership Firm
Case II:
1.Service Provider: In UK selling our product and we make payment 1% on invoice as sales commission.
2.Service Receiver: In India(SEZ) TTE(Export) Partnership Firm
Note:Activities done in UK in both the cases.
I am little bit confusion, please solve this query.
09 October 2012
Since you are deducting the service tax from the payments, it can not be said to be sales commission (expenditure). In either case, since you are deducting the service tax from the payment, you are in a trusteeship role.
10 October 2012
As per Notification No. 40 / 2012-Service Tax
The exemption contained in this notification shall be subject to the following conditions, namely:-
(a) the exemption shall be provided by way of refund of service tax paid on the specified services received by a unit located in a SEZ or the developer of SEZ and used for the authorised operations:
Provided that where the specified services received in SEZ and used for the authorised operations are wholly consumed within the SEZ, the person liable to pay service tax has the option not to pay the service tax ab initio instead of the SEZ unit or the developer claiming exemption by way of refund in terms of this notification.
Explanation.- For the purposes of this notification, the expression “wholly consumed” refers to such specified services received by the unit of a SEZ or the developer and used for the authorised operations, where the place of provision determinable in accordance with the Place of Provision of Services Rules, 2012(hereinafter referred as the POP Rules) is as under:-
(i) in respect of services specified in rule 4 of the POP Rules, the place where the services are actually performed is within the SEZ ; or
(ii) in respect of services specified in rule 5 of the POP Rules, the place where the property is located or intended to be located is within the SEZ; or
(iii) in respect of services other than those falling under clauses (i) and (ii), the recipient does not own or carry on any business other than the operations in SEZ;
Why we pay Service Tax?
The exemption contained in this notification shall be subject to the following conditions, namely:-
(a) the exemption shall be provided by way of refund of service tax paid on the specified services received by a unit located in a SEZ or the developer of SEZ and used for the authorised operations:
Provided that where the specified services received in SEZ and used for the authorised operations are wholly consumed within the SEZ, the person liable to pay service tax has the option not to pay the service tax ab initio instead of the SEZ unit or the developer claiming exemption by way of refund in terms of this notification.
Explanation.- For the purposes of this notification, the expression “wholly consumed” refers to such specified services received by the unit of a SEZ or the developer and used for the authorised operations, where the place of provision determinable in accordance with the Place of Provision of Services Rules, 2012(hereinafter referred as the POP Rules) is as under:-
(i) in respect of services specified in rule 4 of the POP Rules, the place where the services are actually performed is within the SEZ ; or
(ii) in respect of services specified in rule 5 of the POP Rules, the place where the property is located or intended to be located is within the SEZ; or
(iii) in respect of services other than those falling under clauses (i) and (ii), the recipient does not own or carry on any business other than the operations in SEZ;
Why we pay Service Tax?
10 October 2012
Maybe a reading ofthe place of provision of services rules would provide a little more clarity. Articles in this regard in the CA Journal + on many web sites.
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10 October 2012
Kindly Give Answer In Yes/No with reason
10 October 2012
Case I - you are receiving service from abroad and therefore it is taxable in India. CaseII - Service tax is not required to be paid as the service receiver is in SEZ
10 October 2012
Amol Ji
Can we claim refund of service tax in case I?
Can we claim refund of service tax in case I?
11 October 2012
As per Notification 42/2012 ST dated 29/06/12. The exemption shall be limited to the service tax calculated on value of 10% of the FOB value of export goods for which the said service has been used.
So we are exempted from service tax subject to the condition.
So we are exempted from service tax subject to the condition.
11 October 2012
As per Notification 42/2012 ST dated 29/06/12. The exemption shall be limited to the service tax calculated on value of 10% of the FOB value of export goods for which the said service has been used.
So we are exempted from service tax subject to the condition.
So we are exempted from service tax subject to the condition.
11 October 2012
-Central Government hereby exempts the taxable service received by an exporter of goods and used for export of goods of the description specified in column (2) of the Table, from so much of the service tax leviable as is in excess of the service tax calculated on a value up to ten per cent of the free on board value of export. Excess of is the key.
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