SERVICE TAX ON EOU

[VENKATASUBRAMANIAN VENKATACHALAM]

We are an EOU and have done software development to our wholly owned subsidiary. Please advice us whether Service Tax is applicable in view of FTP provision exempting EOUs frmo service tax. Best regards, Venkat

[Sucheta Agrawal]

Dear Mr. Venkat,

No exemption specifically provided to any EOU in Service Tax Act, Rules, Notifications and Circulars. The Service Tax Law will prevail over the FTP provisions, thus, even if the FTP provisions exempting the EOUs from service tax then service tax will be applicable if specifically no exemption given under the service tax law.  

AI Summary

Service tax applicability: EOUs supplying software services to overseas affiliates are taxable unless expressly exempted by service tax law. Service tax applicability for services supplied by an Export Oriented Unit to an overseas affiliate is governed by the Service Tax Act and related instruments; FTP statements do not create tax exemption. In the absence of an express exemption in the Service Tax law, software development services provided by an EOU to its wholly owned subsidiary are taxable under the Service Tax framework.