Service Tax Registration applicability to Export of Services like accounting, software development, website development work, data management etc for foreign client done by Indian company or Freelancers who earn a freelancing income or professional income, which could be income from google adsense, or from projects over Elance or ODesk, or are providing any other form of professional work, are rendering ‘Services’, let us see whether they have to pay Service Tax.
What is Service Tax and who need to pay Service Tax?
When you earn an Income from a rendering any ‘Service’ – Service Tax is usually required to be paid by you (the provider of service) and you have to recover this tax from the receiver of such services (your client). Add it to the total value of your service and the client has to make the payment inclusive of this tax.
Current service tax rate is 14.50%.
For example Value of Service provided by you to your client is Rs 100,000/-. Service tax on it shall be Rs 14,500/-. Your invoice to your client will be Rs 114,500/- and Rs 14,500/- will be service tax collected from the client and which has to be deposited to the government as Service Tax.
Service Tax Applicability
- When revenue is Rs 10 lakhs or less– If the total Revenue (Receipt) you earn from freelancing work is Rs 10 lakhs or less, Service Tax rules do not apply. You will be exempt from collecting and paying service tax on your services. Here Revenue means your total gross receipts from your clients. Note that Revenue has a different meaning from Income, Income would be your revenue net of expenses.
- Service Tax Registration– When you cross Rs 9 lakhs in revenue it is mandatory to apply for service tax registration. You may also apply for registration before reaching Rs 9 lakhs in revenue if you expect your revenue to cross that mark and want to prepare yourself, saves you the last minute rush! Need to get service tax registration done, reach out to us in and we can assist you with it.
- Export of Services– Service Tax is not applicable on services which are exported. Whether a particular service falls under the definition of ‘export of services’ will depend upon what is considered as the place of provision of services – simply, are these services considered as provided outside India or are these services considered as provided in India. There are tax rules that define when services are considered as provided in India or outside India. When this is an export of services and certain conditions are met – service tax may not be applicable. NO Service Tax on Exports. For services exported from India, service tax is not applicable. Therefore, exporters of service are not required to pay service tax. However, it is advisable for service exporters to obtain service tax registration.Unsure whether your service considered as an export – reach out to us and we shall help you!
- Service Tax Payment & Return – Service tax payments can be done online. Doing these payments online is mandatory if your payments exceed Rs 1 lakh in a year. Service tax has to be deposited with the government either quarterly or monthly based on whether you are an individual/company/partnership. Interest may also become payable for any delays in depositing service tax with the government. Service Tax Returns have to be filed twice a year in Form ST-3 or ST-3A as applicable. Once you obtain a Service Tax Registration number, return filing is compulsory for you.
For more assistance, get in touch with an AdroitCorporation.in Service Tax Expert, if you have any questions related to service tax applicability to your income. AdroitCorporation.in can also help you to obtain Service Tax Registration in India. We will be happy to assist you!