Service Tax on remittance u/s. 195

[CHITRA RAGURAM]

An EOU is deducting TDS u/s. 195 of IT Act. All the units making remittance to overseas parties are liable to pay Service Tax.

Since EOU units are already exempted from Service Tax, whether ST has to remitted for these payments or not ?? Please advice.

AI Summary

EOUs Must Pay Service Tax on Imported Services Despite Exemption Status, Can Claim Refund Under Conditions. An Export Oriented Unit (EOU) inquired about the obligation to remit Service Tax on payments made to overseas parties, given their exemption status under section 195 of the Income Tax Act. The query raised whether EOUs must remit Service Tax despite their exemption. The response clarified that EOUs, unlike Special Economic Zone (SEZ) units, are indeed liable to pay Service Tax on the import of services. However, they can subsequently claim a refund, provided they meet specific conditions.