Service tax on import of Service

[Guest]

Dear Sir,

We have tested one our product from Chaina for 'CE' Marking in this transaction we will be liable for Service tax in India under reverse charge mechanism ?

if yes we made payment before 15 Nov 2015 i that which % of service tax applicable.

Regards

Swapneswar Muduli

[Ganeshan Kalyani]

As per Notification no 30/2012 as amended if the service provided by a person in a non-taxable territory and the service recipient is located in taxable territory then the recipient has to pay service tax @100% under reverse charge mechanism. Further the point of taxation for the service recipient to pay service tax under reverse charge is the date of payment to the service provider. In your case you have made the payment before the change in tax rate I.e. before the introduction of Swachh Bharat Cess and hence the rate of tax in your case is 14%.

[Guest]

Dear kalyani Sir,

Thanks for your replay

One more thing i want to know this invoice we made payment in two installment 1st we paid 40% advance in Sept-2015 and rest 60% we paid after availed the service that is in Nov-2015. In that case we paid these two installment with two different Exchange rate so on which amount we consider for calculation the service tax liability under reverse charge mechanism . Still now we are not paid the service tax in this Nov-2015 we will make payment under so is there any interest arise in this transaction as 40% advance already paid in Sep-2015.

Regards

Swapneswar Muduli

[Ganeshan Kalyani]

There is no doubt that service tax shall be paid on the Indian currency I.e. foreign currency converter in Indian rupees. Further the point of taxation for the person required to pay service tax under reverse charge is the date of payment to the service provider. Since you had paid advance to service provider in the month of September the liability for service tax had arised in September and should have been paid in October. Now it should be paid along with interest. Further the tax liability on balance payment to service provider made in November can be paid without interest by 5/6 th of December.

[KASTURI SETHI]

Beautifully explained by Sh.Ganeshan Kalyani, Sir.

[Ganeshan Kalyani]

Thank you Kasturi sir for your appreciation.It boosts me to contribute more and more by sharing my views/reply.

AI Summary

Reverse charge liability for imported services requires recipient to pay tax on payment date; conversion and interest accrue on delay. Imported testing services from a non-taxable territory are taxable under the reverse charge mechanism, with the recipient liable to pay tax at the rate prevailing on the payment date. Taxable value for foreign-currency payments must be converted to Indian rupees using the exchange rate on the payment date. Advance payments create an immediate reverse charge point of taxation and require payment in the subsequent month; delayed payment attracts interest. Tax on later instalments is determined by their respective payment dates and may be paid without interest if paid within the prescribed statutory window.