Export of Service

[Shyam Naik]

A Ltd is in the business of software development. B Ltd is 100% subsidiary of A Ltd and is located outside India.

B Ltd received orders for software development from customers outside India and in turn places orders on A Ltd.

A Ltd supplies the software to B Ltd and receives payment for the same from B Ltd.

Whether, the development and supply of software by A Ltd to B Ltd if 'Export of Service'? Is the relationship of Holding and Subsidiary is covered by explanation 3 to section 65B(44).

Regards,

Shyam

AI Summary

Software Supply to Subsidiary Abroad Considered Export of Service, Exempt from Tax under Explanation 3, Section 65B(44) and Rule 6A. A Ltd, engaged in software development, supplies software to its 100% subsidiary, B Ltd, located outside India. The discussion centers on whether this transaction qualifies as an 'Export of Service' under Indian tax laws, specifically in relation to explanation 3 of section 65B(44) and Rule 6A of the Service Tax Rules. Contributors agree that since B Ltd is in a non-taxable territory and not a branch of A Ltd, the transaction is considered an export and exempt from service tax. The discussion references relevant rules and circulars supporting this interpretation.