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service tax on services received from abroad

kumar vivek (CA) (190 Points)

27 October 2009

Suppose a service is received in india from abroad, the value of which is $15000. Now we(receivers) are liable to pay service tax on same. Please confirm will the amount be $15000*10.3% =$1545.

If in case ur opinion differs, please put up the same.

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5 Replies

santhosh (CA) (636 Points)
Replied 27 October 2009

The rate is rate given by Central Board of Excise and customs and service tax to be paid on value on services less abatement if any available.

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sivaraman (superintendent) (31 Points)
Replied 27 October 2009

Originally posted by :kumar vivek
"	Suppose a service is received in india from abroad, the value of which is $15000. Now we(receivers) are liable to pay service tax on same. Please confirm will the amount be $15000*10.3% =$1545. If in case ur opinion differs, please put up the same.	"

I am fully agreeing with you. But you must be careful with each word. What you said is value which is 15,000 and not what is paid which can be less because of TDS. The actual payment has to be converted to indian Rupess and TDS has to be added and service tax rate (in the present case 10.3% has to be applied over that to arrive at the tax liability

kumar vivek (CA) (190 Points)
Replied 28 October 2009

exactly sivaraman.....gross value is $15000...tds is still to be deducted from .....i would be paying service tax on $15000 rather than $15000l ess TDS

Sunil (Trader) (2611 Points)
Replied 29 October 2009

Even if you have remitted dollars, you have to take the amount you paid to your bank in rupees to remit the dollars and calculate the 10.3% tax on that. Service tax is receipt based. therefore if you pay Indian Rupees to your bank for sending dollars, your base is the Indian Rupee you paid.

However, supossing you are paying service tax on Bank Charges (eg. what a foreign bank deducts from the export bills and sends the balance money to you, then you have to use the TT Selling rate of SBI on the date of deduction of the money to arrive at the Indian Rupee you have to pay for the service on reverse charge basis.

If you have deducted TDS then you have to pay on the full invoice value at the same rate of exchange that bank sent the remittance abroad even though you may pay the TDS at a different rate than your bank rate as income tax TDS is based on TT Selling rate of SBI on date of credit or payment whichever earlier. Service tax is always on receipt / payment basis.

If you bear TDS from your own pocket, you have to adjust the amount upwards with the grossed TDS amount and then pay service tax.