Dear All,
Could anyone elaborate on “Service Tax” applicable to a person working as contracted service (contractor) under an international organization on referred terms (a) operating in India and (b) not operating in India.
Regards,
Dr. Subrata Dutta, PhD
National Coordinator-(FFI-India)
is this interpretation of Service Tax correct?
J S D’Souza
Dear Mr. Mittal and Gopalakrishnan,
Thanks for your replies. But the consultant is operating in India and his office is based in other country. The organization does not have any office in India. This is preciously is the case. I hope Gopalakrishnan has got the issue correctly. What would be your final views on this matter?
To be exempt from service tax, service has to be treated as export of service. As mentioned in my earlier post, to decide the same following factors as referred to under Rule 6A need to be considered.
Place of provision of service: I think even if the service receiver is not based in India (taxable territory), even then it is important that exactly where service is being provided needs to be understood. In this regard, you may refer to Place of Provisions of Service Rules 2012 notified vide Notification No. 28/2012-ST dt. 20-6-2012. Nature of service ad how the same is being provided are important in this context.
Further as mentioned in my earlier post, ensure that funds are rec’d in foreign convertible currency and rec’d within India within the time-frames specified by RBI (generally six months).
Dear Dr Subratta Dutta,
Section 66B of Finance Act is the charging section for Service Tax. As per this section, Service Tax is applicable @ 12% on the value of all services provided or agreed to be provided in the taxable territory, except as identified under negative list. The important term is taxable territory, thus in the specified case, if the service is agreed to / or has been provided within India (except J&K), then service Tax would become applicable.
For treating service as export of service, Rule 6A should also be looked into. It requires that payment of service has been received in convertible foreign exchange, service receiver is outside India and place of provision of service is outside India. In case there are delays in receipt of service as permitted by RBI, then also service tax would become applicable.
rgds
subhash mittal
I presume Mrs Subatra datta wants to know whether fees paid for a person in India retained by an international organisation on contract basis for performing services in India will attract service tax. If my understanding is correct the fees paid to the person in India will not attract service tax as there is inflow of foreign exchange which are exempt under service tax. On the other hand the international office has an establishment in India and paid from this office the fees paid to the person in India will attract service tax if the fees paid to him exceeds Rs 10 lakhs p.a. Collecting and Paying the service tax is the responsibility of the service provider. Hope this clarifies.