Share dividend

[jitendra Gupta]

The unit has incurred expenditure in foreign currency for making payment of divident on its share/dibentures to the foreing parties. As per Section 66A of the Finance Act,1994 unit has to pay service tax on reverse method. Whether this particulars transaction attarct levy of service tax? If so, under which service?

AI Summary

Dividends Paid in Foreign Currency to Foreign Parties Not Subject to Service Tax Under Section 66A of Finance Act 1994 A query was raised regarding whether the payment of dividends in foreign currency to foreign parties attracts service tax under Section 66A of the Finance Act, 1994, using the reverse charge method. The response clarified that this transaction does not attract service tax because it does not qualify as a taxable service under the reverse charge mechanism. The law requires the service recipient to be based in India, which is not the case here, as both the provider and recipient are located outside India. Therefore, no service tax is applicable in this situation.