Taxes applicable for testing services for Australia

[Asked by Guest]

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

Place of provision rules: support services supplied to a foreign corporate recipient fall outside domestic service tax territory, so tax not payable.
The Indian provider's supply of office infrastructure and testing support to the Australian corporate constitutes support services, and the place of provision is the location of the corporate recipient (its place of incorporation). Because the Australian recipient is outside the taxable territory, these services are treated as provided outside the taxable territory and do not attract domestic service tax; receipt in convertible foreign exchange qualifies as export of services. VAT is not applicable to this pure service transaction, and invoices must include mandated tax identifiers to avoid credit denial.