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Q. > Please Help: Payment of sertive tax
Plz. suggest me if a service provider provides taxable service outside india and raise invoice including service tax & received total payment from client the what will be service tax liability of service provider. Whether he will be exempted from service tax as he has provided service outside India?
answered Sep 13, 2011 by Ashish Karundia , New Delhi
Dear Kamal,
Any service may be exported without payment of service tax provided the payment of such service is received in convertible foreign exchange. [Refer Rule 3(2) and Rule 4 of Export of Service Rules, 2005}.
Therefore, you are not required to pay service tax on such export of service if you have received the payment in convertible foreign exchange.
answered Sep 15, 2011 by Ashish Karundia , New Delhi
Dear Kamal,
where the invoice amount is 100 (100+ST NIL), no need to deposit service tax even if your service charges are inclusive of service tax. However, if the invoice amount is 110 (100+ST 10), then in that case you have to deposit that amount of service tax even if it same amounts export of service otherwise the provisions pointed out by chetan will get attracte
Please let us know if your case falls within the two situations mentioned here or otherwise.
Experts Panelist
Comments
Chetan Agrawal
14-Sep-2011 , 03:38:39 pmDear Kamal i agree with Ashishji on the about his opinion that Export of service will not liable for Service tax. However as far as liability in respect of the service tax collected from the client is concerned, as in your case, in my view you are required to deposit such tax collected from the client (even if the same is not required to be collected from the client as the service under consideration is exempt under export of service rules). In support of this view i want to discuss here the provisions of Section 73A(2) of the Finance Act, 1994. It provides that "where any person who has collected any amount which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government". In the light of the above provision, i hope it is clear that you are required to deposit the same with the Government.