Treatment of export of services

[madhavvan n]

CO A is a foreign company and it has an indian subsidiary B. for servicing its clients in india it asks its subsidiary ie B in India to service them, and receives charges for the same from the foreign company ie A. will this be treated as export of services and qualify for being exempt from service tax

AI Summary

Charges from Foreign Parent to Indian Subsidiary in Convertible Currency Qualify as Export of Services, Exempt from Service Tax. A foreign company, Company A, has an Indian subsidiary, Company B, which services clients in India on behalf of Company A. The query raised was whether the charges received by Company B from Company A would be considered an export of services, thus exempting it from service tax. The response clarified that if Company B receives payment in convertible foreign exchange from Company A, which is situated outside India, it qualifies as an export of service. Further clarification can be sought from a CBEC circular dated 24-2-2009 regarding service tax and export of services.