CA Gautam Joshi

This article is written to set 5 principal steps for calling a service falling under export of services.

1. Is it a service?

2. Is it a taxable service?

3. Under which criteria of “export of services” the service is falling?

4. Is the payment received in Foreign Currency?

5. Are other conditions fulfilled as per the criteria of “Export of Services?

Notification No. 9/2005 dated 03-03-2005 introduced “Export of Service Rules, 2005” effective from 15-03-2005. The rules contain definitions, categories of exports, conditions category wise and payment options. The above 5 steps are further elaborated based on “Export of Service Rules, 2005”.

1. Is it a service?

To fall under service tax, the transaction must be a service and shall not be of goods whether trading or manufacturing. Finance Act, 1994 does not define what a service is. Service is to be interpreted from case-to-case basis and as per the General Clauses Act.

2. Is it a taxable service?

Rules of Export of services covers only taxable services i.e. services defined under Section 65(105) of Finance Act, 1994. If service defined as per point number 1 falls under any of sub-clauses of 65(105) of Finance Act, 1994 it is considered as taxable services and then it gets an entry in Export of Services if the same is exported.

If the service is not a taxable service, all benefits available for export of services will not be granted.

3. Under which criteria of “export of services” the service is falling?

Once the service is a taxable service, the taxable service gets entry in export of services. There are three categories in export of services:

Sr. No.

Export of Service


Based on property/Immovable Property


Based on Performance


In relation to Business/Commerce (Known as Recipient basis as well)

The arrangement is aimed to give preferences and put some restrictions at time while another can be of granting exemptions. One must check under which head (i.e. A, B or C) the service is falling to further decide what conditions should be fulfilled to call it an export of service.

 4. Is the payment received in Foreign Currency?

Service tax is a destination based consumption tax. Any service consumed within India and covered in service tax attracts tax.

Considering the destination as main focus, services provided/used/benefited outside India are called export of services in general. However, the aim of granting export incentives is to attract foreign currencies in India and looking in to it the general condition of any of the criteria (i.e. A, B or C) is the payment must be received in foreign currency.

If payment is not received in foreign currency, there is no need to see specific criteria as listed in point 5 are fulfilled or not.

5. Are other conditions fulfilled as per the criteria of “Export of Services?

Apart from general conditions, there are some specific conditions.

For example, to call supply of tangible goods service as an export of service, the tangible goods supplied for use are located outside India during the period of use of such tangible goods.

The above 5 steps are in general. It is a best practice to read all facts on case-to-case basis and then take a decision when a service can be called as exported.

More Under Service Tax


  1. Tarlochan SIngh says:

    Dear Gautam Joshi,
    My company registered in NCR and havinf service tax registration is providing services (Strategic Marketing Support Services)to a foreign company which uses it
    to decide how to proceed with respect to their business decission in India. The invoices are raised in dollars are the payments are received in dollars which our bank then credits to our account in Rupees based on prevailing rate on the date of receipt of advice. Please intimate whether we are covered under the export of services rules and are we entitled to any benefits for service tax. We have been earlier paying service tax at 10.3 percent on the invoice amount.
    Tarlochan Singh

  2. V.L.Parameshwaran says:

    Dear Mr.Gautam Joshi:

    One of my clients is an STPI Unit and having office at Chennai. Now, they have opened a branch office and a portion of service is rendered there and transferred to Chennai, where the all the services are put together and exported. Now, a service tax superintendent says, that, the branch office is doing service to the Chennai office and liable for service tax registration. All the export invoices are being raised from Chennai office only. Now, is there a service tax liability for the services rendered by the branch office and transferred to the Chennai office. Kindly clarify.

    1. GAUTAM JOSHI says:

      Dear Parameshwaran,

      Please answer this question to yourself whether your branch office has any relation to the final service that your are exporting? If the answer is yes, you need to get your branch registered and not otherwise.

      In other words, if you are providing any services from the branch, receiving any services from the branch or the branch is engaged in relation to providing or receiving such services in any other manner, then please get your branch registered.

      In service tax legislation, there are two options for registration:
      1. Single Registration separate for separate premises/branches or
      2. Centralised Registration of one premises with adding adresses of all other premises or branches.

      Option number 2 is applicable when company is operating through centralised billing or centralised accounting.

      In your case, I think, if your company is operating through centralised billing or centralised accounting from Chennai office then I will advise you take a centralised registration wherein showing the Chennai office as Centralised office and adding rest of all premises as branches.

      Please feel free to ask further.

      Warm Regards.

  3. Deepak Agarwal says:

    Export of intangible service to Nepal & payment will in any foreign currency or nepali ruppees, will this will consider as export of services?

    Below are facts.

    1. Address of Nepal is mentioned in Agreeemnt.
    2. Billing from India will be in any foreign currency or Nepali currency
    3. Remittance from Nepal will be in any foreign currency or Napali currency.

    Pleae reply.

    Deepak Agarwal

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January 2021