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Service tax

sekharsc (partner) (85 Points)

04 March 2016

A private limited company dealing in global HR solutions shortlists candidates for various companies in India and overseas.

It raises invoices on companies outside the country without service tax and has been paying service tax @ 6% recently changed to7%.

Recently the company has been advised that service tax is not payable on invoices raised on overseas companies.

Payments are received directly in the Bank account of the company.

Is there a circular exempting the company as above involved in the busines as above from paying service tax

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1 Replies

CA Ashish Garg (Chartered Accountant) (545 Points)
Replied 07 March 2016

Your service qualifies as Export of Service in terms of Rule 6A of Service Tax Rules, 1994 read with Rule 3 of Place of Provision of Service Rules. 2012. You are not liable to pay service tax on such services.

Further the CENVAT Credit Rules, 2004 has specifically excluded the export of services from the definition of exempted service and hence you need not to pay 6% or 7% service tax to avail CENVAT Credit. You are eligible to avail full CENVAT Credit of service tax paid on export of such services.

You are entitle to claim the refund of unutilized CENVAT Credit of service tax paid on input services within one year from the date of export from the department.