Service Tax Exemption

[Guest]

I have started web agency as sole proprietorship. We build websites and mobile apps for our clients. All our clients are form UK. And we have crossed the 10Lac turnover mark.

Can anyone please let me know is my service exempted from service tax, as all of my clients are from outside India. If we are exempted, do we still need to register for service tax for that exemption.

Any help would be highly appreciated.
Regards
Tousif

[KASTURI SETHI]

Dear Sh.Tousif Ahmed Ji,

Service being provided by you is exempted from ST by virtue of Export of Service under Rule 6 A of Service Tax Rules,1994. Pl. ensure that invoices are being addressed to clients based outside India and foreign exchange is being received in your bank account. You need not apply for ST registration as turnover of export of service being fully exempted is not to be accounted for threshold limit of ₹ 10 lakhs in terms of Notification No.33/12-ST as amended.

[Ganeshan Kalyani]

Sir I agree with Sri Kasturi Sir, export of service is exempt from Service tax. The documentation is essential for Servuce tax audit and need to be taken care of. Thanks.

[Manoj Agarwal]

With due respect to the learned experts, I would like to disagree regarding relevance of Rule 6A of STR, 94 (Export of Service) which in my view is not relevant per se for determining taxability. That is relevant for rebate purpose but here the issue regarding taxability has to be determined through Place of Provision of Service Rules, specially with reference to the Rule 10. If rule 10 is applicable, then the service is taxable in India otherwise not.

AI Summary

Export of service exemption may exclude overseas receipts from registration threshold but place of provision rules govern taxability. Services supplied to overseas clients may qualify as export of service and be exempt from service tax if invoices are addressed to non resident clients and payment is received in foreign exchange; such exempt export turnover is excluded from the registration threshold so registration need not be triggered by that turnover. Proper documentation should be maintained for audit, while an alternative view notes that taxability ultimately depends on the Place of Provision of Service Rules determining where the service is supplied.