onshore services by overseas supplier

This query is : Resolved

BNK REDDY (Querist)
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02 June 2011 Our offshore supplier has formed an indian subsidiary and the subsidiary is doing certain onshore services like unloading of equipment supplied by the parent company who is suuplying equipment from overseas.
whether the services rendered by indian subsidiary will be linked to the main contract of supply of equipment by parent company.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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05 June 2011
The services rendered by the Indian Subsidiary are being rendered in India and
and are taxable services from the service tax point of view.
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The Indian Sub. Company is a separate legal tax entity.
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The party to the contract of supply of Machinery is the Offshore supplier.
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Linking the services with the supply contract means the -supplier has quoted the price which includes the service charges of unloading also. In this case the payment of unloading charges to Indian Sub. is made by the offshore supplier.
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In either cases, the Indian subsidiary is liable to Indian Taxes.
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For the sake of simplicity, the supply of machinery contract should not be linked with the supply of services.