Dear Sir/Madam,
We are a Civil Engineering Services Provider, offering Engineering Design & Detailing for Indian companies while adhering to all service tax regulations. Recently, we have been presented with an opportunity to provide similar services to a US-based client. This client operates in the USA, with projects also based in the USA. Invoices are raised to the USA, and payments are received in Dollars.
Service Tax Applicability on International Income
The query arises regarding the applicability of service tax on this income. There seems to be a debate among individuals—some suggest that once a company falls under the service tax purview, tax payments are mandatory regardless of the income source, be it from India or abroad. However, after researching various forums, it appears that services provided to companies outside India, with remuneration received from overseas, are exempt from service tax.
Differential Tax Implications for Domestic and International Clients
Is it feasible for a company to have both types of clients, with differential tax implications? Can a company segregate tax payments, applying service tax to Indian earnings while exempting foreign income?
If there are specific sections within the regulations that confirm these practices, kindly provide the relevant details.
Thank you,
Hilmesh Gandhi
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1We are a Civil Engineering Services Provider, offering Engineering Design & Detailing for Indian companies while adhering to all service tax regulations. Recently, we have been presented with an opportunity to provide similar services to a US-based client. This client operates in the USA, with projects also based in the USA. Invoices are raised to the USA, and payments are received in Dollars.
Service Tax Applicability on International Income
The query arises regarding the applicability of service tax on this income. There seems to be a debate among individuals—some suggest that once a company falls under the service tax purview, tax payments are mandatory regardless of the income source, be it from India or abroad. However, after researching various forums, it appears that services provided to companies outside India, with remuneration received from overseas, are exempt from service tax.
Differential Tax Implications for Domestic and International Clients
Is it feasible for a company to have both types of clients, with differential tax implications? Can a company segregate tax payments, applying service tax to Indian earnings while exempting foreign income?
If there are specific sections within the regulations that confirm these practices, kindly provide the relevant details.
Thank you,
Hilmesh Gandhi
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Normally, service tax is not applicable on the export of services. However, you would need to confirm that your transaction satisfies the conditions necessary to avail the exemption as per the service tax law.
Regards,
Avika Kapoor
General Manager - Business Development
E-174, Kalkaji, New Delhi-110019
[Phone Number Removed For Privacy Reasons]
Website: http://www.kapgrow.com
From India, New Delhi
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Regards,
Avika Kapoor
General Manager - Business Development
E-174, Kalkaji, New Delhi-110019
[Phone Number Removed For Privacy Reasons]
Website: http://www.kapgrow.com
From India, New Delhi
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As far as my knowledge goes, there is no service tax on services done outside India (export of services). However, payment in foreign currency should have been received by you for the services rendered within the stipulated time as per RBI guidelines (I understand that it is 12 months). If payment is not received within this stipulated period, you need to pay service tax with interest from the date of completion of service (the date of completion is deemed to be the point of taxation, and hence you need to have documents for this).
Regards,
Raja C S N
Chennai
From India, Madras
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Regards,
Raja C S N
Chennai
From India, Madras
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ST-Point of Taxation in Service Tax.doc
Notification No GSR 1165(E) Central Goods and Services Tax.pdf