Service tax on designing services

[JOSHIL JAIN]

one of our client is receving desiging services related to textile prodcuts in India from a consultant based in USA. Whether Indian party is liable to deposit service tax on such designing services under Import of services.Please advise?

[Guest]

As per Import of service rules, Designing service fall under Rule 3(iii) where recipient of the service in India is liable to pay tax. Thus, in respect of your case, you are liable to pay tax on the designing service received for your textile products in India under reverse charge method.

AI Summary

Reverse charge mechanism: recipient must pay service tax on imported designing services under import of service rules. Designing services procured from a foreign consultant are treated as imported services under the Import of Service Rules, and the Indian recipient is liable to discharge service tax by the reverse charge mechanism, requiring the domestic recipient to self-assess and remit tax.