10 October 2012
Suppose I am service provider based in India, providing some reference to Foreign Clients for financial arrangement to be made on Foreign grounds with their Foreign Banks, for this I am receiving the consideration from those clients in convertible foreign exchange.
1)What will be the place of provision of Service under this case?
2)Will this service will be taxable under Service Tax or can I take the benefit of Export of Services?
10 October 2012
You have to apply rules sequentially in the order in which they appear in the place of service rules. The first rule is location of service receiver is the place of service. In your case as the service receiver is not in taxable area, the service would not be taxable provided non of the subsequent rules make it deemed to be provided in taxable area. Eg of subsequent rules are supposing if the service is related to immovable property, if immovable property is located in taxable territory, even if recepient of service is outside it becomes taxable as you have to test in sequential order. If immovable property is outside India and even receiver outside India then it is not taxable. However the next rule is if property is outside India but both receiver and provider are in India, then it becomes taxable as that rule comes sequentially after. Therefore you make a chart of point no 1 to 8 and start applying the test one after the other. Where your test ends determines the taxability.
10 October 2012
As per location of service receiver based category, it is an export of service. Because the service receiver is located outside india. Also the receipt is in foreign currency. Hence it is an export of service.
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