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Export of services - exempted?

Siri (Director) (73 Points)

20 September 2012

We have incorporated a Pvt LTD Company in Hyderabad and we run operations from Hyderabad.

We would be providing Software services to a client whose registered office is outside India.

But they have various subsidiaries through out the world including one in India (Bangalore).

They would make the payment in Pounds (GBP) from a bank outside India and we would receive it at the existing exchange rate in INR in a local bank account in Hyderabad.

I want to find out if we need to pay service tax? or are we exempted under export of services?

I also read that from June 2012 some Service tax rules have changed.

Kindly clarify.

Thanks a lot

Siri

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6 Replies

Arun Kumar Singh (GST Advocate) (15220 Points)
Replied 20 September 2012

In your case place of provision will be non-taxable teritory. You are exempt from service tax.

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Siri (Director) (73 Points)
Replied 20 September 2012

Thanks a lot for your reply Arun.

Could you also please clarify if:

1. If we don't need to pay service tax at all or pay tax and claim returns (refund of paid tax)

2. If we dont need to pay service tax, should we still file service tax returns this October

3. Also during service tax registration, would it be required to mention that we would deal only with export of services and get it recorded in their records.

Or just get registration done normally and avoid paying service tax?

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 21 September 2012

You do not need to pay any output service tax if the service is exported as per rule 6A of Service Tax Rules 1994 read with Place of provision of service rules 2012.

You have to pay input service tax to your service providers on input services used by you to provide output service.

It is better to obtain registration though you do not have any output liability. If you are registered, then filing of half yearly returns are also needed.

Make sure the foreign client pays you proceeds within 1 year of date of export througn normal banking channels in FC.

Regards,

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