IT services performed outside India

Tax queries 458 views 4 replies

Venkatesh

Director

70 Points Joined February 2010

Dear All,

We are providing IT staffs across India and performing services. We got an opportunity to service to an overseas client in Saudi and we plan to send out IT staff there.

1) I want to know, if I raise Invoice should I charge service tax of 10.3% as I do in India or not required

2) Whether I have to deduct Income-tax from my employees. I have to pay in dollars for their expenses at saudi ( Food,accommodation & local transport) in USD. How these expenses can be accommodated without tax?

3) Whether my company have to pay Income-tax on the profit out of this transaction ?

Any tips to reduce / avoid taxation as all my receivables are in dollars.

Thanks to all in Advance

venki

Replies (4)

Rahul Gupta [CA,CS]

Asst Manager

39 Points Joined July 2010

As being the export of service ST is not liable to charge.

Regards,
Rahul

CA Shiv

Business Controller

2987 Points Joined February 2010

1. Service tax is not to be charged.

2. You can pay directly the exp. secondly you can also give them some PDA. so that the employee can make local transport and other minor exp from it. Also try to keep some bill so tht it wont be taxed from employee and employer.

3. Also Yes you need to pay IT on profit from the transaction. But you have to do accounting accordingly.

Venkatesh

Director

70 Points Joined February 2010

Originally posted by : CA Shivang
	1. Service tax is not to be charged. 2. You can pay directly the exp. secondly you can also give them some PDA. so that the employee can make local transport and other minor exp from it. Also try to keep some bill so tht it wont be taxed from employee and employer. 3. Also Yes you need to pay IT on profit from the transaction. But you have to do accounting accordingly.

Thanks Shivang,

Shall I claim the tax exemption for the expenses ( Boarding, lodgin, local travel, air travel, visa charges and food) towards my employee stay at saudi? If yes, is it vouchers and allowances are acceptable for tax exempetion?

venki