We have a project contract in Malaysia. We have subcontracted to a contract for erection & commission work who is registered in Malaysia. He will bill on us and we make the payment to him. Do we have to pay service tax as a receipient by cash under Sec 66A and take credit of the same. Is there any TDS to be deducted by us. Also, can he charge any Malaysia Tax to us. Please clarify.
1 Answer from Attorneys
HI,
A service received in India is said to be Import of service when the service is provided from outside India and received in India. For this the statute has formulated " Taxation of Services ( Provided from outside India and received in India) Rules , 2006.
As per Rule 3 (ii) of the above rules , Services falling under 3 (ii) shall be treated to have been imported when such services are performed in India. Erection , commissioning or installing services falls under the above rule 3(ii) ( Services related to Performance of Service).
Therefore having understood the above , in our view , the present case does not fall under the import of service, because the service is not being performed in India. The service is performed outside India.
Section 66 A would not be applicable.
Shoould you need more clarifications , feel free to contact us.
Regards
Jeevesh Mehta
Advocate ( Taxation & Corporate).
Ph; 9811617186
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