Service tax and TDS on payment to Singapore-resident party

[Rakesh Goel]

Hello:

I would like to clarify the following matter:

An  Indian private limited company wants to engage the services of a Singapore resident party for exploring partnership or joint venture opportunities in Singapore.  The Singapore resident party has no presence in India and the service will be rendered from Singapore. Please advise on the applicability of service tax and withholding tax for the Indian company in the following scenarios:

1. The Singapore resident is an individual and does not have a PAN number.
2. The Singapore resident is an individual and does have a PAN number.
3. The Singapore resident is a company and does not have a PAN number.
4. The Singapore resident is a company and does have a PAN number.

Thank you.

Rakesh

[CASeetharaman KC]

The item would be covered under service tax as the service is provided by one person to another in the taxable territory and also does not constitute an item specified in the Negative List (Section 66B). The amount concerned would be  chargeable to service tax at the specified rate of 12.36%. The payment of service tax in this case is required to be made by the recipient of the service under the reverse charge mechanism wherein the recipient of the service would be required to discharge 100% of the service tax liability.as provided by Item No 10 of Reverse Charge Notification No 30/2012 dated 20-06-2012. 

[Rakesh Goel]

Thank you for the clarification on service tax liability. What about the withholding tax liabilty?

AI Summary

Service tax reverse charge: Indian recipient must discharge service tax on cross border advisory services; TDS question unresolved. Services procured from a Singapore resident for exploring partnership or joint venture opportunities are chargeable to service tax when the recipient is in the taxable territory and the service is not on the Negative List; under Item No. 10 of Reverse Charge Notification No. 30/2012 the Indian recipient must discharge the entire service tax liability (reverse charge), cited at an effective rate of 12.36%. The question of withholding tax (TDS) on payments to the Singapore resident under varying PAN scenarios remains unanswered in the supplied text.