The service provider(SP) is an Individual freelancer situated in Delhi. Enters into a contract with foreign entity(FE)for feasibility study of a project situated abroad. Whether receipts of SP chargeable to service tax.
What if the FE has a PE in india.
What if the project is in India
What if project in India And FE has PE in India
The SP need not travel anywhere for the above purpose.
16 June 2014
As per my view service tax shall not be charged by the freenlancer on the fees:
Reason sfor my reply: As per Export of services rules (Rule 6A of service tax Rules) 1.The service provider should be located in taxable territory-In your casethe freelancer is in Delhi,a txable territory 2.The service receiver should be located outside India-In yourcase the FE is located outside India 3.The service is not a Exempted Service 4.The Place of provision of service is outside India-In your case the general rule that is the location of service receiver shall be place of provison SHALL APPLY .Therefore as the place of provision is outside India,service tax shall not be charged.Even if he has a PE in India that doenot not been its place of provision is India. Please note that the service provided by the freelance is not a performance based service as neither it is performed in respect of any goods that were required to be physically present in India neither the service are provided to an individual whose physical presence is required in India 5.The payment is received in Convertible Foreign Exchange-In your case we assume that receipt shall be in CFE 6.The service provider and receiver are not merely establishments of a distinct person as per Section 65b Clause 44 Explanation 2(b)-In your case the service provider and the service receiver are not part of the same group and are not linked to each other.Therefore even the last conditionis satisfied for exports.
I would request other experts to put in there valuable opinions.
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