07 April 2009
A company has two branches one at Pune and another at Bangalore. Pune is 100% EOU and the services rendered by it is exempt from the Service tax.
The concern is Pune branch renders the services to customers but Bangalore branch collects the money from the customers. Is pune exempt from the payment of service tax liability?
07 April 2009
No, service tax is payable by pune branch though it is 100% EOU. Further, even if Bangalore branch receives money it does not change the liability concept, it is merely a procedure aspects to collect money. hanumatha@gmail.com
But, the Pune branch has exported the services and the Bangalore branch has received the amount from customers towards the exports made by the Pune branch. Now, As the service rendered is received outside India and the payments for the same are received by Bangalore Branch, what is the implications of the same?
Is pune branch exempt of service tax? Is bangalore branch required to pay tax. it is quite confusing
08 April 2009
Yes, it is not liable to pay service tax as these services are exported outside India. Further, pls look at your accounting entries in both the branches it is quite difficult to account. The methodology followed may not suits for financial reporting unless it is registered as input service distributor.
Further, pune branch is not liable to pay service tax as the services are exported. Bangalore branch is not liable to pay service tax as it does not render any services.
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