Receipt in Foreign Exchange
This query is : Resolved
16 December 2010
M/S A (Indian private limited co.) doing repairs and maintenance service in India.
Also the company A on behalf of M/S F (Foreign Co. having no permanent establishment in India) does
a) Installation and after sales service i.e. repairs and maintenance (of product supply by M/S F) during warranty period in India
b) Marketing their products in India and received sales commission.
Billing for these services are done to M/S F and payment is received in convertible foreign exchange.
Whether service tax is applicable or it is exempted Export Services?
Also the company A on behalf of M/S F (Foreign Co. having no permanent establishment in India) does
a) Installation and after sales service i.e. repairs and maintenance (of product supply by M/S F) during warranty period in India
b) Marketing their products in India and received sales commission.
Billing for these services are done to M/S F and payment is received in convertible foreign exchange.
Whether service tax is applicable or it is exempted Export Services?
24 December 2010
Service Tax is payable on (a); (b) is export of service and exempted.
24 December 2010
Some one else has suggested as under:
MS A is providing Installation and After Sales services in India on behalf of MS F and therefore the services provided by A will fall in the category of Business Auxiliary Services (BAS). Same is the case with marketing services provided by A to F. In case of BAS, if the service recipient is based outside India and the amount is received in convertible foreign exchange, the services will b deemed to be export and will not be liable to Service Tax.
In the case of the recipient of services who will be making payment to F, the recipient of services will be required to pay service tax on import of services under section 66A of the Act. As the recipient will be paying service tax, the same service cannot be taxed again in the case of MS A
MS A is providing Installation and After Sales services in India on behalf of MS F and therefore the services provided by A will fall in the category of Business Auxiliary Services (BAS). Same is the case with marketing services provided by A to F. In case of BAS, if the service recipient is based outside India and the amount is received in convertible foreign exchange, the services will b deemed to be export and will not be liable to Service Tax.
In the case of the recipient of services who will be making payment to F, the recipient of services will be required to pay service tax on import of services under section 66A of the Act. As the recipient will be paying service tax, the same service cannot be taxed again in the case of MS A
24 December 2010
Yes. Very good logic.
I examined the issue (a) from the point of view of maintenance and repair service, and hence took into consideration the place of performance of service.
The suggestion is correct, in the sense that service is being provided to F as F is making the payment. Looking at this angle, it is a Business Auxiliary Service and export of service.
Thanks for the insight.
I examined the issue (a) from the point of view of maintenance and repair service, and hence took into consideration the place of performance of service.
The suggestion is correct, in the sense that service is being provided to F as F is making the payment. Looking at this angle, it is a Business Auxiliary Service and export of service.
Thanks for the insight.
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