Ad-Free CAclubindia and Daily Updates on your mobile. Subscribe Now!

Is this export of service or not?

AMehta (InfoTech Professional) (47 Points)

24 October 2011

We have a firm which provides website design, development, hosting services.

- We have rented servers from a US company and they are located outside India. (The same servers are used for various clients, Indian and non-Indian).

- We do website coding for a foreign entity in India and move the website to our server located outside India.

- The client is located outside India and does not have any business establishment in India.

Is this export of service or not? Should we charge ST to the client?

Thank you in advance :)

Reply
Follow
Share

4 Replies

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 24 October 2011

Website coding is classfiable under design services. Situs of recipient is the test for export of service. If recipient is situated outside India and amount received in FE, then it is export of sevice and not taxable. Taking server on rent may amount to import of service taxable in your hands. This has to be examined on further information.

1 Like

Upgrade to CAclubindia Pro. Subscribe Now!

AMehta (InfoTech Professional) (47 Points)
Replied 25 October 2011

Thank you for your response.

The recipient of service is located outside India and is a foreign citizen. The payment is received in foreign exchange. We have FIRC and also emails from bank to that effect. So I can safely say that this is export of services. (It is actualy out-sourcing to us)

As for import of service, the service provider is outside India (US Data Center), service is also provided outside India and we are making payment in foreign currency every month (auto-charge to credit cards). Is there still ST liability on it?

CA Unnikrishnan Nair N (Chartered Accountant) (2083 Points)
Replied 25 October 2011

Under given facts , the service of US date centre is classifiable either under Business Support Service (Infratructure support) or under Supply of tangible goods service . For both the category, situs of recipient is the test to determine import of sevice. As long as you are situated in India, the the place of performance of sevice is irrelevant for the test. I thik that you are taxable under reverse taxing. Anyway you can raise a separate query for this, let us see opinion of other experts.