Service tax on forex commission
This query is : Resolved
yogesh bhanushali
(Querist)
06 January 2010
XYZ is a company based in Germany manufacturing automated folding machine..
ABC (FROM INDIA)assist the sales of these machines in India to end-users. When XYZ sells machines in India through ABC ,XYZ invoice the end-users directly and pay commission to ABC. Also for the spare parts sold to the customers, XYZ pays commission TO ABC.
ABC in turn help them identify customers and inform the same to XYZ. XYZ also provide service to the machines during the warranty period.
ABC RECEIVES commission in foreign exchange
WHETHER ABC IS LIABLE TO CHARGE SERVICE TAX ON ABOVE SERVICE PROVIDED?IF YES THAN IN WHICH SERVICE CATEGORY?
ABC (FROM INDIA)assist the sales of these machines in India to end-users. When XYZ sells machines in India through ABC ,XYZ invoice the end-users directly and pay commission to ABC. Also for the spare parts sold to the customers, XYZ pays commission TO ABC.
ABC in turn help them identify customers and inform the same to XYZ. XYZ also provide service to the machines during the warranty period.
ABC RECEIVES commission in foreign exchange
WHETHER ABC IS LIABLE TO CHARGE SERVICE TAX ON ABOVE SERVICE PROVIDED?IF YES THAN IN WHICH SERVICE CATEGORY?
Bimal Thacker
(Expert)
06 January 2010
If in your case XYZ recipient of service does not have commercial presence/establishment in India then it would be constitute an Export of service and would consequently be exempt from the levy of service tax.
However if XYZ have commercial presence/establishment or office within India then service tax is applicable under Business Auxiliary service
However if XYZ have commercial presence/establishment or office within India then service tax is applicable under Business Auxiliary service
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