We have a service contract from Malaysia. We have in turn sub contracted to a service provider in Malaysia and asked them to provide service at Malaysia. We have to make payment to the service provider from India. We presume that there is no payment of service tax as per sec 66A and also there is no deduction of TDS in this case. Please let us know whether we are correct. If no, please clarify with the relevant provisions.
1 Answer from Attorneys
Conditions for imposition of service tax under 66 A i.e import of service are :
The service must be provided from a country out side India
The said servises must be received in India.
In your case the services are being provided and received in Malaysia itself. Therefore liability under 66 A is not attracted but the department ion few cases have contested that in a transaction like yours the benefit of such service accrued in India, so it should be covered under Import of Service and service tax be levied on it.
Regards
Jeevesh Mehta
Custom, Excise and Service Tax Consultant
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