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Import of Services

Sanjay (Consultant) (25 Points)

22 October 2008

Hi all experts,

This is Sanjay..........I have question about services provided from out side india and received in india.

We have to pay service tax on import of such services on reverse machanisum, Please advice me whether receipient of services is able to claim input credit of service tax paid on such import of services.

is it necessary to apply for separate registration in case service provider (from out side india) and receiver (in india) provide same services?

Egarly waiting for your reply

Regards,

Sanjay Jhala

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7 Replies

Kishan Kumar (-) (569 Points)
Replied 23 October 2008

As per taxation of service rules,2006

Rule-4 Service receipient shall get himself registered
Rule-5 The service imported into India
for which service recipient is liable for payment of ST
shall not be treated as “Output Service”

other services for payment of such amount
for the purpose of using cenvat credit of

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Sambu Suresh (CA Job) (564 Points)
Replied 23 October 2008

Hi,

If foreginer providing in out side India and you are receiving that in India, then you need not to pay any service tax.

suppose if the foreginer comes and provides those service in India, then you need to pay the service tax by revrerse calculation.

I think this clarifed your doubt.

Sambu Suresh (CA Job) (564 Points)
Replied 23 October 2008

Hi,

If foreginer providing in out side India and you are receiving that in India, then you need not to pay any service tax.

suppose if the foreginer comes and provides those service in India, then you need to pay the service tax by revrerse calculation.

I think this clarifed your doubt.

CA Pradeep Jain (Job - Finance Department) (69 Points)
Replied 19 February 2009

hi all

Suppose a foreign company (ABC) has deputed the expats (their employees) in Indian subsidiary company (XYZ) . they are still on the rolls of ABC. They are discharging their duties in India for XYZ & getting the salary directly in their home country from ABC. They get the salary net of Income tax & income tax is to be borne by ABC.

In return ABC raises invoices on XYZ & get reimbursement. I want to know different tax (income tax, Service tax & FBT) implications on various transactions involved in it.

1) When XYZ reimburses the money do the have to deduct TDS as it is just reimbursement?

2)Shall these reimbursement will be considered as proffesional fees & servcie tax will be charged accordingly?

3)regarding Income tax of Expat employee, as it is borne by ABC, will the income be grossed up for the purpose of Income tax calculation?

4)when ABC has to pay Income tax of expat to the Indian revenue ,they will transfer the funds to XYZ & XYZ will accordingly make the tax payment . what would be the nature of this payments ( e.g. in the nature of TDS deposited or it will be paid alongwith return of Concerned employee)

If I am not clear at any point or you think this is not sufficient information please let me know.

Thanks for your help in advance.

CA Pradeep Jain (Job - Finance Department) (69 Points)
Replied 19 February 2009

Hi all A company is engaged in service industry It receives domestic as well as Import services & renders domestic as well as export servcies. It do naot maintain seperate books of accounts. To have this with numbers lets say domestic services recieved -100 INR +12.36 Imort services received - 100 INR & as per service tax rules 12.36 INR paid to service tax authorities. Then regarding revenue we have 250 INR export services & 250 INR domestic servcies rendered along with S.T of INR 30.9 That means we have to pay service tax on output service amounting to INR 30.9 & also regarding import services 12.36. But we have alredy paid 12.36 on deomestic inpit services & also aboce 12.36 (import services ) is also input services. How much credit can be taken while discharging the servcie tax liabilty? Thank you

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Rajesh Kumar (Advocate- Tax) (7806 Points)
Replied 20 February 2009

The credit of service tax paid is available both on domestically procured service as well as import of service. Such credit can be utilised for payment of service tax on service provided in Domestic tariff area. No service tax is required to be paid on export of service.

CA Pradeep Jain (Job - Finance Department) (69 Points)
Replied 24 February 2009

Dear Rajesh

Thanks for your reply. But I want to know as per above example how much credit we can take. i.e while making the payment of 30.9 INR on output services how much credit we can take ( i.e. ST paid on services (12.36 on domestic services) & (12.36 on Import service)). as company is engaged in both export & domestic services & is not maintaining seperate books of accounts.