Sales commission to foreign comission agent
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
26 September 2017
We are a manufacturer and we are paying Sales Commission to foreign commission agent in USD.
Commission Agents giving us sales order in their respective country whether RCM is applicable
Commission Agents giving us sales order in their respective country whether RCM is applicable
26 September 2017
Service rendered out side taxable territory hence RCM not applicable.
Message likes :
1 times
Querist : Anonymous
Querist :
Anonymous
(Querist)
17 January 2018
Dear Expert, We are a manufacturer and we are sending Input and semi-finished goods for processing to Job workers. Job workers returning goods to us after processing withing 180 days and Charging us Service Tax. In your excise audit authority saying Service Tax is exempted and you can not tax a Service Tax thought it is charged because it is already exempted. Now Is it correct that job worker can not charge service tax and we can not take cenvat benefit. Please guide us by rule in details. Please urgent
Read more at: https://www.caclubindia.com/experts/job-work-and-service-tax-credit-of-cenvat-urgent-please-2619814.asp
Read more at: https://www.caclubindia.com/experts/job-work-and-service-tax-credit-of-cenvat-urgent-please-2619814.asp
23 July 2025
Let's address both your queries one by one:
---
### 1. **Sales Commission to Foreign Commission Agent**
* You are paying commission to a foreign agent in USD for sales orders obtained in their country.
* **Is Reverse Charge Mechanism (RCM) applicable?**
**Answer:**
* Since the **service (commission agent's services) is rendered outside the taxable territory of India**, GST is **not applicable** on this transaction.
* **RCM is not applicable** in this case because the place of supply is outside India, so the service is considered export of services and is outside the scope of GST in India.
* You do not need to pay GST on reverse charge basis for commission paid to foreign agents.
---
### 2. **Job Work and Service Tax on Job Work Charges**
* You send input and semi-finished goods to job workers for processing.
* Job workers return the goods after processing within 180 days and are charging you Service Tax.
* During excise audit, the authority says:
* **Service Tax is exempted on job work** (as per rule), so you **cannot be taxed again**, and **CENVAT credit cannot be claimed** on job work service tax charged.
---
### What does the law say?
* Under **Service Tax law (before GST)**, **job work services on inputs or semi-finished goods were exempted** from Service Tax if conditions were met, e.g., goods returned within 180 days.
* **Circular No. 187/9/2011-ST dated 20 May 2011** states that job work service on inputs or semi-finished goods is exempt from Service Tax provided the goods are returned within 180 days.
* Therefore, **job worker should not charge Service Tax** if the job work falls under this exemption.
* Consequently, your input service credit (CENVAT) on such service tax paid **is not available** because the service is exempt.
---
### Summary:
| Scenario | Service Tax Charged by Job Worker | CENVAT Credit on Service Tax | Comment |
| ------------------------------ | --------------------------------- | ---------------------------- | ------------------------------------------ |
| Goods returned within 180 days | Should **not** be charged | No credit since exempt | Service tax exemption applies as per rules |
| Service Tax charged anyway | Not correct | Credit not allowed | Service tax charged improperly |
---
If you want, I can help you draft an official reply or provide references for GST transition, or advise on how to handle this now under GST regime. Would you like that?
---
### 1. **Sales Commission to Foreign Commission Agent**
* You are paying commission to a foreign agent in USD for sales orders obtained in their country.
* **Is Reverse Charge Mechanism (RCM) applicable?**
**Answer:**
* Since the **service (commission agent's services) is rendered outside the taxable territory of India**, GST is **not applicable** on this transaction.
* **RCM is not applicable** in this case because the place of supply is outside India, so the service is considered export of services and is outside the scope of GST in India.
* You do not need to pay GST on reverse charge basis for commission paid to foreign agents.
---
### 2. **Job Work and Service Tax on Job Work Charges**
* You send input and semi-finished goods to job workers for processing.
* Job workers return the goods after processing within 180 days and are charging you Service Tax.
* During excise audit, the authority says:
* **Service Tax is exempted on job work** (as per rule), so you **cannot be taxed again**, and **CENVAT credit cannot be claimed** on job work service tax charged.
---
### What does the law say?
* Under **Service Tax law (before GST)**, **job work services on inputs or semi-finished goods were exempted** from Service Tax if conditions were met, e.g., goods returned within 180 days.
* **Circular No. 187/9/2011-ST dated 20 May 2011** states that job work service on inputs or semi-finished goods is exempt from Service Tax provided the goods are returned within 180 days.
* Therefore, **job worker should not charge Service Tax** if the job work falls under this exemption.
* Consequently, your input service credit (CENVAT) on such service tax paid **is not available** because the service is exempt.
---
### Summary:
| Scenario | Service Tax Charged by Job Worker | CENVAT Credit on Service Tax | Comment |
| ------------------------------ | --------------------------------- | ---------------------------- | ------------------------------------------ |
| Goods returned within 180 days | Should **not** be charged | No credit since exempt | Service tax exemption applies as per rules |
| Service Tax charged anyway | Not correct | Credit not allowed | Service tax charged improperly |
---
If you want, I can help you draft an official reply or provide references for GST transition, or advise on how to handle this now under GST regime. Would you like that?
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