Service Tax on Monthly Retainership recvd in Foreign Currency

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  1. IMTIYAZ AHMED

    IMTIYAZ AHMED New Member

    Dear Sirs,
    I have started a partnership Firm two months back. To provide services in India to a foreign company. They are industrial equipment manufacturer, and I am working as their sales agent/representative in India. In return I get monthly retainer ship in foreign currency. The turn over in this financial year ( 14-15) will be less than 9 Lacs, and in next financial year ( 15-16) it will be more than 10 Lacs.

    I understand from all previous similar threads in the forum that I do not have to pay service tax and I do not need to register in this financial year ( 14-15) since turnover is less than 9 Lacs. However I will have to pay service tax & register in the next financial year ( 15-16) since turn over will be more than 10 Lacs.

    Question in this situation is : Will I have to pay service tax for previous financial year ( 14-15 ) when I am paying tax in / for financial year 15-16 ?

    Related question :
    1. Is services tax applicable for services mentioned above ? considering work is done for a foreign company and payment is received in foreign currency ? at what rate ?
    2. Is services mentioned above in negative list of service ? so it will not attract service tax.
    3. Some times foreign company's sales manager comes to India for business trip. Their hotel bill, air travel ticket etc is paid by us with understanding that they will reimburse us on their return in foreign currency to our bank account. Is service tax applicable on this service ? at what rate ? Can we charge service tax to foreign company in our invoice ? What is the maximum handling charges we can levy for providing this service ?
     
  2. Aditi Gulati

    Aditi Gulati Active Member

    1. You are only required to pay Service Tax for the year 2015-16 and not for 2014-15
    2. Prima facie, it seems that Service Tax would be applicable in your case. However, it is advisable to check the Place of Provision Rules as there are a couple of things to checked to determine whether this qualifies as export of service or not.
    3. Services mentioned above are not in the Negative List of Services.
    4. You can charge them for hotel bookings and service tax would be levied on these charges as well.
     
  3. Sudheer Paidi

    Sudheer Paidi New Member

    you are only required to pay service tax for the financial year 2015-16 as the turnover exceeds threshold only in the fy 2015-16
    As per rule 9 of pops rules 2012 you are liable to service tax as service is provided in taxable territory

    1.yes service tax is applicable @normal rate
    2.the said service is not specified in the negative list

    3.the reimbursement is not liable to service tax provided they are separately indicated in invoice but if separate handling charges are charged service tax has to be paid on such handling charges

    There is no limit on how much you can charge as handling charges
     
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