TaxTMI 
TaxTMI 
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.
Service tax on Development of new product
21 Sep 2016 
5 Replies 
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Place of provision determines service tax applicability; separate paid development services to a foreign recipient may be treated at recipient location.
Service tax applicability turns on contractual/payment structure and the place of provision: if development/testing is a separately charged service to a foreign recipient, service tax may be relevant; if no separate payment is received, respondents say service tax would not apply and costs may be amortised into manufactured goods. The place of provision is generally the recipient's location, or the provider's location if the recipient's location is not ascertainable. (AI Summary)
Service tax applicability turns on contractual/payment structure and the place of provision: if development/testing is a separately charged service to a foreign recipient, service tax may be relevant; if no separate payment is received, respondents say service tax would not apply and costs may be amortised into manufactured goods. The place of provision is generally the recipient's location, or the provider's location if the recipient's location is not ascertainable. (AI Summary)