Service tax applicability - services rendered outside India

[shankar narayanan]

If the company bidding for services to be provided outside the country, then service tax is not applicable, if the quote or order is in normally acceptable foreign currency like a USD or GBP or EUROS,Since the Bid is proposed to be quoted in USD or Euro which is an Export of Service, hence Service Tax is not applicablable. Other currency like a Bhutaneese or a Nepali or a Bangladeshi will attract service tax even though services are given outside india. My Query: Whether the assessee will get the service tax relief, if the company gets the money in Nepali or Bhutani currency?

[Ravi Chopra]

There is no restriction as per Export of Services Rules, 2005 for receiving convertible foreign exchange from Nepal or Bhutan. Since trade between Nepal and Bhutan is permitted in rupee, therefore in excise there are separate provision for export of other countries and export to Nepal / Bhutan. If you are able to receive consideration in convertible foreign exchange, yes you are eligible for export of service benefits.

AI Summary

Export of service: receiving convertible foreign exchange enables export benefit eligibility even when payment originates from Nepal or Bhutan. Applicability of service tax depends on whether the supply is an export of service and on receipt of consideration in convertible foreign exchange. If payment for services provided outside India is received in a normally acceptable convertible currency, the supply qualifies as export of service and is not subject to service tax. Receipt of convertible forex from transactions with Nepal or Bhutan also permits export benefit eligibility despite bilateral rupee trade arrangements.