TaxTMI 
TaxTMI 
Share dividend
18 Sep 2010 
1 Reply 
1281 Views Asked by
Reverse charge service tax inapplicable when both provider and recipient are abroad; dividend payments to foreign parties not taxable.
Dividend or debenture payment services made in foreign currency to foreign parties are not taxable under the reverse charge because the recipient is not located in India and the service is not received or used in India; the reverse charge applies only where the recipient has a place of business, fixed establishment, permanent address or usual residence in India, and special rules about individual non business use and provider establishment location are exceptions applicable in other circumstances. (AI Summary)
Dividend or debenture payment services made in foreign currency to foreign parties are not taxable under the reverse charge because the recipient is not located in India and the service is not received or used in India; the reverse charge applies only where the recipient has a place of business, fixed establishment, permanent address or usual residence in India, and special rules about individual non business use and provider establishment location are exceptions applicable in other circumstances. (AI Summary)
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?