Dear experts
We are manufacturer of organic chemicals. We have also researchanddevelopment center in our factory where we are developing new products.
We have our US base parent company for them only we develop new products. 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.
Our EA-2000 audit is going on and audit team is of view that service tax will be payable according to Rule 4 of place of provision rules 2012 i.e. we are doing R & D on goods which are reimburse by our parent company.
Please share your views
R&D Services for US Parent Exempt from Service Tax Under Rule 4 Due to Export Status, Experts Confirm &D A manufacturer of organic chemicals with a research and development center in India is developing products solely for its US-based parent company, which reimburses all R&D expenses. During an EA-2000 audit, it was suggested that service tax might be applicable under Rule 4 of the Place of Provision of Services Rules, 2012. However, multiple experts in the forum concluded that the R&D activities constitute an export of service, exempt from service tax, as the service recipient is located outside the taxable territory. The discussion also touched on the distinction between exporting services and goods and the implications of selling products derived from R&D in India. (AI Summary)
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