Service tax on Services provided outside India
Whether Services provided by a management consultant in India to a foreign company liable to service tax in India ? Whether it would be considered as export of service ? Is there any exemption ?
service tax is charged on basis of place of benefit. If the benefits are received in India, service tax needs to be charged.
Since management services are provided in India but benefits are received out of India, service tax is not chargeable.
For this purpose we need to go through Service Tax (Place of Provision of Service)-PPS Rules. This gets covered by Rule 4 of PPS which tells " Services provided in the physical presence of the individual represented by a service receiver or any person on behalf of him, would be the place where service is actually performed".
In this case service is provided in india under the presence of the service receiver. Hence the place of provision of service is within India. Since the PPS is india it is not a export of service & gets taxed in india.