Category of service - R & D service

[Yatin Bhopi]

Dear experts

We are manufacturer of organic chemicals. We have also research and development center in our factory where we are developing new products.

We have our US base parent company for them only we develop new product. Parent company will be sole owner of discoveries made in R & D center. All expenses incurred by us on R & D center which includes salary of employees reimbursed by parent company through quarterly invoice raised by us.

Please let me know what will be the “Category of service”?

AI Summary

Export of services: R&D provided to a foreign parent is treated as export and not subject to service tax.
Where an Indian manufacturer's R&D centre performs work for a foreign parent located in a non taxable territory, the activity is treated as an export of services and is not liable to service tax; for DGFT registration the appropriate classification is Other Than Negative List rather than Consulting Engineering Services.