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service tax

nidhi jain (student) (177 Points)

27 September 2008

Is service tax applicable when any indian company provided services to any foreign company?

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2 Replies

CA V. Mohanakrishnan (Chartered Accountant) (401 Points)
Replied 27 September 2008

The Export of Service Rules identifies three broad criteria for determining whether there is export of service - property related service, performance related service , recipient related service.

all services are categorised under the three above and depending of the specific service company is providing the criteria has to be applied for determining service exported without payment of tax.

Otherwise it is taxable at the normal rates for each of the service

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Madhukar N Hiregange (Chartered Accountant) (39034 Points)
Replied 30 September 2008

The Export of Services Rules 2005 as they stand today set out that services received outside India, used outside India, and considereation in Convertible Foreign Exchange could be excluded from tax provided they satisfy the conditions in the three catgeories ( location (13 services) , performance(53) and situs of recepient(41)

Commonly 3 conditions as under:

The services provided in India/ from India to a foreign company ( branch/ office) in India would be liable for the service tax as long as the service were taxable.

The services provided to foreign companies outside India which are used in India would also be liable for tax in India.

The services provided to foreign companies outside India which are used outside India and services are paid in INR and not in CFE would also be liable to ST ion India.

Once the service is one which is exported then the excise duties on capital goods, inputs and input services used for provding the taxable services could be refunded/ rebated on application being made.