Service tax on Development of new product

[Vijay Chitte]

Dear Experts,

We are doing development of new product in India, & our client is located at foreign country, foreign party does not providing any materials for development of product, we are also provide testing service for that new product development.

My Question is : 1) Service tax will be applicable or not? under which POP rule will be applicable?
2) This activities fall under which category of service?
3) If possible, provide any case laws for this query.

AI Summary

Service Tax Not Applicable for Developing New Product in India for Foreign Client Under Certain Conditions A discussion on service tax applicability for developing a new product in India for a foreign client. The client provides no materials, and testing services are included. An expert suggests no service tax applies if no service is rendered. Another clarifies that they are developing, not manufacturing, and a separate contract will follow. It is noted that if the client doesn't pay separately, service tax isn't applicable, but costs will be amortized, affecting excise duty. Another expert initially states service tax applies if agreements are separate but later corrects to say it does not apply.