Intellectual Property Rights: Practice and Drafting by Adv Gautam Matani. Register Now!
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Dhruva Shah (Student)     19 September 2009

Taxation of Design Services covered under DIPP

I would like to have the opinion of the experts on the following matter:


AB a JV of indian & Foreign party avails design service from B a foreign party. Design Service is performed out of india & the completed design is sent to india.

I would like to know whether such servies aer covered under DIPP & its  tax effect henceat.


Would appreciate your comments


 5 Replies

S R agrawal (Service)     25 September 2009

Mr Dhruv, I welcome your querry. Your transacion is liable to Service Tax And the liability to pay the Service Tax is upon the person receiving the Service in India as per Import of Service Rules. Your confusion arises due to the fact that the designing was done out of India and therefore you believe that no Service was provided in India. In fact any service provided from outside India and if such Service is either provided in India or comsumed in India shall be treared as Import of Service and such Service shall be liable to Service Tax under Section 66A of the Finance Act 1994. I hope you would be satisfied with this explanation. Thanks. 

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     26 September 2009

Agreed with aggrwal.

1 Like

Dhruva Shah (Student)     26 September 2009

Sir, I would like to have your view from Income Tax angle & FEMA angle as well.

It would be gr8 to hear from you once again.


S R agrawal (Service)     27 September 2009

Welcome Mr. Dhruv. Payment of Service Tax is to be made only in India and that too in INR. there is therefore, no involement of FEMA. As regards Income Tax, this is a revenue expenditure and to be treated like that.Thanks.,

Raj Kumar Makkad (Adv P & H High Court Chandigarh)     27 September 2009

SR Aggarwal's opinion is correct becs he is expert in such matters.

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