service tx payment

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    CHIARA FRI New Member


    I am an italian chartered accountant.

    One of my client, an italian society, pays an Indian agent for commissions and consulting fees on which the 15% service tax is applied.

    I presume that the indian agent will then pay the service tax received by my client to the Govt. of India monthly or quarterly.

    My question is:

    If he buys other services from service providers who, in their turn, apply service tax on them, can he deduct this service tax (i.e. the one he paid to the service providers) from the service tax he has to pay to the Govt. of India (i.e. the one applied to the service he provided to my client), thus paying just for the difference between the two?

    Thank you very much for your kind answer,
    best regards.
  2. Ronak Pandya

    Ronak Pandya New Member

    As per my understanding and going through your query, to my understanding, he can't do that.
  3. ZED

    ZED Well-Known Member

    When that person who is in India, provides service to a person outside India (being an Society in Italy) then isn't this a case of export of service? [Presuming he is not an intermediary & Provided other conditions are met]
    If its an export of service then there should be no service tax.

    Rule 6A of Service Tax rules
    The provision of any service provided or agreed to be provided shall be treated as export of service when, -
    (a) The provider of service is located in the taxable territory,
    (b) The recipient of the service is located outside India,
    (c) The service is not a service specified in the section 66D of the Act,[That is its not in negative list]
    (d) The place of provision of the service is outside India,
    (e) The payment for such services has been received by the provider of service in convertible foreign exchange, and
    (f) The provider of service and recipient of service are not merely establishments of a distinct person in accordance with item (b) of Explanation 3 of clause (44) of section 65B of the Act.

    CHIARA FRI New Member

    Thank you for your answers and sorry for not having written you before!

    Actually, the indian provider of service is an agent who provides his services in India to the italian company who sells goods (plant and equipment) to its Indian customer.

    So, i am afraid I can't say that the services are provided outside India...
    Am I right?
  5. ZED

    ZED Well-Known Member

    Ok, now I have a better view of the picture. I too wish to apologize for delay in responding, actually I normally have 40+ tabs open and sometimes some topics are delayed because of this.

    It is possible to claim the credit of the input services as per Cenvat Credit Rules

    Credit can be taken in respect of an input service and input service has been mean to be defined as-:

    Rule 2 (l) "input service" means any service,-

    (i)used by a provider of taxable service for providing an output service; or

    (not relevant)
    (ii) used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal,

    and includes services used in relation to setting up, modernization, renovation or repairs of a factory, premises of provider of output service or an office relating to such factory or premises, advertisement or sales promotion, market research, storage upto the place of removal, procurement of inputs, activities relating to business, such as accounting, auditing, financing, recruitment and quality control, coaching and training, computer networking, credit rating, share registry, and security, inward transportation of inputs or capital goods and outward transportation upto the place of removal;[/S]
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