VAT for export of services?

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S Menon (Querist)
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22 April 2010 Dear Sir,

If a company's entire turnover consists of income from IT Enabled Services, i;e income from billable hours of human resources, then w.r.t VAT, please let me know whether there will be tax liability under the following two scenarios;

1. If it is an export

2. If it is done domestically.

Kindly give me an answer at the earliest..

Thanks in Advance

Smenon

ABHINAV AHUJA

ABHINAV AHUJA (Expert)
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23 April 2010 Dear Smenon,
(1) VAT is applicable on sale of goods and not on provision of services.

(2) To determine whether the deliverable is goods or services , the specific agreement with client needs to be studied
The phrase "income from billable hours" is nowhere indicator of whether the output is goods or services.

Generally going by your description , ITES will not consist any goods element.Hence there will not arise any tax liability either in export or domestic provision.