Question
Indian company entered into a Joint Venture with a Foreign Company. Indian co. is providing some services to foreign co. & those services are provided in India itself & for those services Foreign co. is paying Commission in foreign currency.
Pl tell whether Indian co. has to raise invoices for those commission including service tax or not. pl reply asap
Answer
As per export of service Rules, 2005 services are treated as exported only when conditions as prescribed under Rule 3(2) of such rules are satisfied.
These rules stipulate the following 2 conditions
1. The services should be provided from India but used outside India
2. Payment for such services is received in convertible foreign exchange.
As per your query it is clear that payment is received in convertible foreign currency. The other key condition that the service should be used outside India also needs to be satisfied to be exempt from service tax.
Hope this answers your query.
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