Taxes applicable for testing services for Australia

[Lavanya Chava]

Hi,

I am a client manager. My Australian company has given me a team and made a tie up with Indian company where we work, the Indian company has to raise the invoice every month which I have to pass then only the invoice will be paid.

I want to know whether the Service Tax, VAT and Education Cess are applicable for software testing services. They are leving the taxes as VAT :12.3% extra on basic value and @ 7% Education Cess on total invoice after VAT, VAT is 14%, can I know is this correct.

Thanks and Regards

Lavanya

AI Summary

Indian Company Incorrectly Charges Service Tax on Export Services to Australian Firm; Exempt from Taxes per Rules An individual managing testing services for an Australian company via an Indian company inquires about the applicability of Service Tax, VAT, and Education Cess on invoices. The Indian company charges 12.3% VAT, 7% Education Cess, and 14% Service Tax. A respondent clarifies that since the services are provided to an Australian company, they fall outside the taxable territory, and no service tax should be applied. The Indian company is incorrectly charging service tax, and the transaction should be considered an export of services, exempt from such taxes. The discussion also touches on the necessity of including TIN/STC codes on invoices and the differences in tax applicability between proprietorships and private limited companies.