Service tax implications
This query is : Resolved
12 June 2014
What shall be the service tax implication on bidding charges, project fees etc. deducted by agencies like paypal, o-desk, elance, guru from remittances receviable by an indian free lancer for providing IT based sevices to foreign clients obtained from the above mentioned platforms? To clarify, those charges are deducted from the payments directly before the amount is remitted to Indian free lancer? Shall the indian free lancer be resposible to pay service tax as import of service on the above mentioned charges? Requesting a solution to my query by quoting respective Service Tax rules/notifications/circulars.
12 June 2014
Sorry. I am not able to understand your query.
We are trying to see the service tax implication of India free lancer who is getting fees for the same for providing services to outside party.
Is he availing any service? Not able to figure that out.
Help me with the details and I shall be happy to help.
We are trying to see the service tax implication of India free lancer who is getting fees for the same for providing services to outside party.
Is he availing any service? Not able to figure that out.
Help me with the details and I shall be happy to help.
Message likes :
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13 June 2014
Dear Mr. Sudeep,
I will try to put it in simpler form . appreciate your reply.
My query goes thus..
Mr. X, a freelancer, provides IT based services to clients, which approach him through platforms like paypal, odesk , etc. There are 2 things:
1. The service which he provides to clients, will be deemed as export of services and thus, exempt.
2. The service provided to him by platforms like paypal, odesk, etc. for which they directly deduct certain amount from his consideration before the consideration is remitted to him. Is, Mr. X, required to pay service tax on amount deducted by paypal, odesk, etc. as import of service to provide exported output service?
If yes, can you please guide me through the relevant provisions, circulars & procedures?
I will try to put it in simpler form . appreciate your reply.
My query goes thus..
Mr. X, a freelancer, provides IT based services to clients, which approach him through platforms like paypal, odesk , etc. There are 2 things:
1. The service which he provides to clients, will be deemed as export of services and thus, exempt.
2. The service provided to him by platforms like paypal, odesk, etc. for which they directly deduct certain amount from his consideration before the consideration is remitted to him. Is, Mr. X, required to pay service tax on amount deducted by paypal, odesk, etc. as import of service to provide exported output service?
If yes, can you please guide me through the relevant provisions, circulars & procedures?
13 June 2014
Ok, now it seems a little better.
IT based services has to be export , well not necessary. You shall have to look into details. (Read Export of Services Rules - as applicable after 01 July 2012 - Date that changes the Legislation topsy turvy)
Import of service, need to check more factual details.
Your answer is perfect if everything is before 01 July 2012. Post that definition of IMPORT and EXPORT has become very fact specific.
I have uploaded a presentation of mine on Export of services on the web. That will help you to get a quick grip.
We can have a small chat in case you want to close this quickly.
Sudeep 9619161183.
IT based services has to be export , well not necessary. You shall have to look into details. (Read Export of Services Rules - as applicable after 01 July 2012 - Date that changes the Legislation topsy turvy)
Import of service, need to check more factual details.
Your answer is perfect if everything is before 01 July 2012. Post that definition of IMPORT and EXPORT has become very fact specific.
I have uploaded a presentation of mine on Export of services on the web. That will help you to get a quick grip.
We can have a small chat in case you want to close this quickly.
Sudeep 9619161183.
13 June 2014
Well, the service in question is provided after July 2012. In the last financial year to be precise. I have read the Export of Service Rules and according to it, the services provided my Mr. X, clearly qualifies into export of service. No confusion till now.
The confusion lies in the fact that whether should Mr. X, pay service tax on the charges deducted by paypal, odesk which they have deducted for allowing Mr. X to use their platform to obtain clients, get work orders, issue bill on his behalf, collect payments & then remit the payment after deducting their charges.
The confusion lies herein because, Mr. X is not directly related to the client. neither does he issues the invoice directly nor reveices the payment. The client deals with the Paypal, odesk directly; pays them the amount due.
So, can Mr. X, claim that he provided the service directly to Paypal, Odesk as he apparently had no negotiations with the client nor did he receive the payments directly. What he received from paypal , odesk were the net payments from which he did not pay any further charges.
Complicated issue.
Thanks in advance for looking into my query.
The confusion lies in the fact that whether should Mr. X, pay service tax on the charges deducted by paypal, odesk which they have deducted for allowing Mr. X to use their platform to obtain clients, get work orders, issue bill on his behalf, collect payments & then remit the payment after deducting their charges.
The confusion lies herein because, Mr. X is not directly related to the client. neither does he issues the invoice directly nor reveices the payment. The client deals with the Paypal, odesk directly; pays them the amount due.
So, can Mr. X, claim that he provided the service directly to Paypal, Odesk as he apparently had no negotiations with the client nor did he receive the payments directly. What he received from paypal , odesk were the net payments from which he did not pay any further charges.
Complicated issue.
Thanks in advance for looking into my query.
13 June 2014
Whether an export or no, check it well, you are missing on a few changes in law.
Contract needs to be studied and classification under which this service comes has to be determined.
From what you provide above, it seems like business auxiliary service provided by pay pal and other, only in that case - no service tax.
However, before taking a black or a white stand contract shall have to be read.
Contract needs to be studied and classification under which this service comes has to be determined.
From what you provide above, it seems like business auxiliary service provided by pay pal and other, only in that case - no service tax.
However, before taking a black or a white stand contract shall have to be read.
Message likes :
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17 June 2014
Thanks a lot, Mr. Sudeep. Appreciate your reply.
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