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
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