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

[Markesh Antony]

If he is receiving amount from a foreign company in convertible foreign exchange and situation of that company outside India itself is an evidence that it is an export of service. For more clarification you may refer the circular of CBEC dated 24-2-2009 on service tax and export of services.

AI Summary

Export of services: payments received in convertible foreign exchange from a non resident generally qualify for service tax exemption.
If an Indian subsidiary receives payment from its foreign parent in convertible foreign exchange for services connected to the non resident payer or its clients, those receipts will ordinarily be treated as export of services and eligible for service tax exemption, with receipt in convertible foreign exchange and payer's foreign residence serving as primary evidentiary factors.