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Is export of services exempted from service tax?

ranasubh (B.Com) (30 Points)

01 June 2013

Hi Experts,

I have a question, I'm resident of India and providing web development services outside India and receiving payments in $. I would like to know that the payments I received is exempted from services tax in India?

If Yes, do I need to take any EXIM numbers as I'm receieving payments in $ ?

and If I'm exempted do I need to file service tax return or not ?

This is all I want to know about.

Really thankfull that you spent time on reading my question and replying the same.

Regards

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14 Replies

Pinky Agarwal (Chartered Accountant) (426 Points)
Replied 01 June 2013

Originally posted by : ranasubh

Hi Experts,

I have a question, I'm resident of India and providing web development services outside India and receiving payments in $. I would like to know that the payments I received is exempted from services tax in India?

If Yes, do I need to take any EXIM numbers as I'm receieving payments in $ ?

and If I'm exempted do I need to file service tax return or not ?

This is all I want to know about.

Really thankfull that you spent time on reading my question and replying the same.

Regards

Dear Sir,

As per Rule 6A of Service Tax Rules, 1994, provision of any service provided or agreed to be provided shall be treaed as Export of Service if following conditions are satisfied:-

1. The provider of taxable service is located in taxable territory.

2. the recepient of service is located outside india.

3. the service is not a service specified in the negative list [Section 66D].

4. the place of provision of the service is outside india.

5. the payment for such service has been received by the provider of service in convertible foreign exchange.

As per my view, In your case all the above conditions are satisfied. Hence, it will be covered under export of service and you are not liable to pay service tax.

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ranasubh (B.Com) (30 Points)
Replied 02 June 2013

Hi Pinky Agarwal,

Thanks for your quick reply. As you said I'm not liable to pay service tax. My further question was:

1) Do I need to take any EXIM number as I'm receieving payments in $ ?

2) Do I need to file service tax return or not ?

Your reply to this will be appericiated.

Regards

samir (xxx) (21 Points)
Replied 22 September 2013

hi,

I am providing services for company outside India but i receive payment in INR. They send a Demand Draft in INR payable by their supporting bank in India.

so will that be exempted?

kindly advise.

S Visweswaran (CONSULTANT) (24 Points)
Replied 17 October 2013

Friends,

Can anyone respond to the query of Mr. Samir which was posted 24 days ago?

I am also facing similar situation.

Any advise on this is highly appreciated.

with regards,

S.Visweswaran

DIVYANSHU BAJPAI (Others) (27 Points)
Replied 01 January 2014

Hi Pinky,

Could you please provide your suggestions for this thread: /forum/is-service-tax-applicable-for-me--275910.asp

I appreciate your help.

Thanks!

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Anshul (CA Final Aspirant) (42 Points)
Replied 29 January 2014

As per Rule 6A of Service Tax Rules, 1994, provision of any service provided or agreed to be provided shall be treaed as Export of Service if following conditions are satisfied:-

1. The provider of taxable service is located in taxable territory.

2. the recepient of service is located outside india.

3. the service is not a service specified in the negative list [Section 66D].

4. the place of provision of the service is outside india.

5. the payment for such service has been received by the provider of service in convertible foreign exchange.

6. the provider & recepient are not merely establishments of a distinct person.

In your case, i presuppose that the services you are providing are provided from india i.e. a taxable territory & so the place of provision of service is not outside india (exception 4) , hence it is not covered under export of services & thus taxable.

Dilip (chief Accounts Officer) (79 Points)
Replied 29 January 2014

4.1.4. Place of Provision of Services Rules, 2012: 4.1.4.1. Relevant definitions under Rule 2 of Place of Provision of Services Rules, 2012. (h) “location of the service provider” means- (a). where the service provider has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained; (b). where the service provider is not covered under sub-clause (a): (i) the location of his business establishment; or (ii) where the services are provided from a place other than the business establishment, that is to say, a fixed establishment elsewhere, the location of such establishment; or (iii) where services are provided from more than one establishment, whether business or fixed, the establishment most directly concerned with the provision of the service; and (iv) in the absence of such places, the usual place of residence of the service provider. (i) “location of the service receiver” means:- (a). where the recipient of service has obtained a single registration, whether centralized or otherwise, the premises for which such registration has been obtained; (b). where the recipient of service is not covered under sub-clause (a): NKR & CO. [Confidential Document] Page 5 (i) the location of his business establishment; or (ii) where services are used at a place other than the business establishment, that is to say, a fixed establishment elsewhere, the location of such establishment; or (iii) where services are used at more than one establishment, whether business or fixed, the establishment most directly concerned with the use of the service; and (iv) in the absence of such places, the usual place of residence of the recipient of service. Explanation:-. For the purposes of clauses (h) and (i), “usual place of residence” in case of a body corporate means the place where it is incorporated or otherwise legally constituted. Explanation 2:-. For the purpose of clause (i), in the case of telecommunication service, the usual place of residence shall be the billing address. 4.1.4.2. Rule 3 of Place of Provision of Services Rules, 2012- Place of provision generally. “RULE 3. Place of provision generally. — The place of provision of a service shall be the location of the recipient of service: Provided that in case the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service.”

vijay patel (article assistant) (21 Points)
Replied 01 April 2014

hi expert

i have question that if service provider is located in india and provide a web devlopment service to outside india and payment received in INR. so this export service is exmpt or not ?

Sumit Malik (Executive) (21 Points)
Replied 21 May 2014

Hi, If service provider is located taxable territory and service recepient is outside India then following conditions needs to be satisfied to treat it as export.

1- Billing/Invoice raised to outside India.

2- Agreement/LOE should be done outside India

3- Currency may be in INR/other than INR.

So, your question is for Currency, yes if the currency received is in INR then its is an export of service from chargebitlity point of view.

Nitin Bhatt (Account Executive) (25 Points)
Replied 22 September 2014

Hi Expert,

My Question is how Export service dealer adjust their Service tax Credit or Claim their service Tax Paid on Service received.

With regards

Nitin Bhatt

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Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 25 September 2014

Hi Ranasubh

I hope you might be with your answer as on date. But still i present my view in your case.

Please refer to conditions mentioned by Anshul, for a service to be considered as Export of SERVICE.

In nutshell, if you receive payment in USD - conditions are satisfied.

And, if you receive payment in INR - conditions are not satisfied.

But above transactions will not affect Place of Provision of service

As per rule 3 of place pf provision of service - POPS is the location of service receiver - Foreign Country.

Hence, service is not provided in taxable territory - ST NOT LEVIABLE.

Conclusion - If you are providing services out of india - whether payment is received in INR or USD - ST is not leviable.

Kashish Gupta (B.com (H) , ACA) (368 Points)
Replied 26 September 2014

Hi Nitin Bhatt

Service provider satisfying all conditions of export of service mentioned u/Rule 6-A of Service Tax Rules,1994 is eligible to get refund of excise duty/ service tax paid on inputs/ Input services used in providing such service.

Condition : Refund shall be of Rs. 1000 or more.

CCr is not claimed.

Procedure : Refund claim shall be filed with jurisdictional AC/DC of Excise. and a declaration is required to be filed prior to the export of service specifying a) service intended to be exported with descripttion, amount and value of service tax payable on input services actually required to be used in providing the service to be exported.

Shivanand (Account Assistant) (21 Points)
Replied 03 December 2014

, Our company in bangalore( India) and we providing software development services outside India and receiving payments in $. I would like to know that the payments I received is exempted from services tax in India ? and even i registred the ST on 2009, till now i dint show the NIL but now i got the message from Service tax Sub : Service tax- Investigation from Superintendent (now what i should reply them .

balwant (xyz) (21 Points)
Replied 19 March 2015

Dear ,

DIVYANSHU BAJPAI and S Visweswaran,

If you are receiving the payment for your service in INR then it does not satisfy the condition for export and hence taxable under service tax.
to determine the taxability of exported service two thing need to be verified

Place of provision of service { i.e. Place of recipient of service/ place of goods or property on which service is provided (deemed to be export if service recipient is also situated outside India)}
Receipt of convertible foreign currency