Sevice tax on buying agents
This query is : Resolved
16 November 2013
One of my clients is acting as a Buying Agent in India for a Principal based out of India.
His business primarily is to help his Principal, who is outside India, to buy premium see food products from India and selling them in his own country. In return, the agent gets a commission based on a %age of value of products bought.
My query is:-
1. Whether the activity carried out by the agent is a service ?
2. If yes, whether the service tax would be applicable given the fact that principal is based abroad ?
I have read somewhere that buying and selling agent's (like above) activities are out of scope of service tax.
His business primarily is to help his Principal, who is outside India, to buy premium see food products from India and selling them in his own country. In return, the agent gets a commission based on a %age of value of products bought.
My query is:-
1. Whether the activity carried out by the agent is a service ?
2. If yes, whether the service tax would be applicable given the fact that principal is based abroad ?
I have read somewhere that buying and selling agent's (like above) activities are out of scope of service tax.
16 November 2013
As per the Place of Provsions Rules,2012, the place of provision lies at the location of the service recepient which in this transaction is in non-taxable territory, no tax is payable.
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19 November 2013
Thanks Mr. Jain !!
Could you please also clarify whether these services were taxable or not under Export of Service Rules 2005, prior to introduction of POP rules 2012.
Thanks !!
Could you please also clarify whether these services were taxable or not under Export of Service Rules 2005, prior to introduction of POP rules 2012.
Thanks !!
25 July 2025
Great question regarding **service tax on buying agents** and export of services!
---
### 1. **Is the activity of a buying agent a service?**
* Yes, acting as a **buying agent** is considered a **service** because it involves providing intermediary services to the principal (facilitating purchase).
---
### 2. **Is service tax applicable if the principal is based outside India?**
* **Under Service Tax law (pre-GST)**, services provided to a non-resident outside India may qualify as **“Export of Services”** and be **zero-rated** (i.e., no service tax payable).
---
### 3. **Place of Provision Rules (POP), 2012**
* According to **POP Rules 2012**, the **place of provision of service** is generally where the service recipient is located.
* Since your principal is outside India (non-taxable territory), the **place of provision is outside India**, hence **service tax is not applicable**.
---
### 4. **Before POP Rules (i.e., under Export of Service Rules 2005)**
* Services exported (i.e., provided to a non-resident) were considered as **“export of services”** if:
* The supplier is located in India
* The recipient is located outside India
* The place of provision of service is outside India
* The payment is received in convertible foreign exchange or in Indian rupees wherever permitted by RBI
* The supplier and recipient are not related persons
* Buying agent services provided to a principal abroad would likely qualify as export of services and be **zero-rated (no service tax payable)**.
---
### **Summary:**
| Condition | Pre-POP (Export of Service Rules 2005) | Post-POP (Place of Provision Rules 2012) |
| ------------------------------------------ | -------------------------------------- | --------------------------------------------------------- |
| Buying agent services to foreign principal | Export of services (zero-rated) | Place of provision outside India → No service tax payable |
---
### Additional notes:
* The agent’s commission income would not attract service tax as long as the place of provision rules confirm it is outside India.
* However, if the service recipient (principal) was in India, service tax would be applicable.
---
If you want, I can help draft a short summary note or provide the exact sections and notifications involved. Would that help?
---
### 1. **Is the activity of a buying agent a service?**
* Yes, acting as a **buying agent** is considered a **service** because it involves providing intermediary services to the principal (facilitating purchase).
---
### 2. **Is service tax applicable if the principal is based outside India?**
* **Under Service Tax law (pre-GST)**, services provided to a non-resident outside India may qualify as **“Export of Services”** and be **zero-rated** (i.e., no service tax payable).
---
### 3. **Place of Provision Rules (POP), 2012**
* According to **POP Rules 2012**, the **place of provision of service** is generally where the service recipient is located.
* Since your principal is outside India (non-taxable territory), the **place of provision is outside India**, hence **service tax is not applicable**.
---
### 4. **Before POP Rules (i.e., under Export of Service Rules 2005)**
* Services exported (i.e., provided to a non-resident) were considered as **“export of services”** if:
* The supplier is located in India
* The recipient is located outside India
* The place of provision of service is outside India
* The payment is received in convertible foreign exchange or in Indian rupees wherever permitted by RBI
* The supplier and recipient are not related persons
* Buying agent services provided to a principal abroad would likely qualify as export of services and be **zero-rated (no service tax payable)**.
---
### **Summary:**
| Condition | Pre-POP (Export of Service Rules 2005) | Post-POP (Place of Provision Rules 2012) |
| ------------------------------------------ | -------------------------------------- | --------------------------------------------------------- |
| Buying agent services to foreign principal | Export of services (zero-rated) | Place of provision outside India → No service tax payable |
---
### Additional notes:
* The agent’s commission income would not attract service tax as long as the place of provision rules confirm it is outside India.
* However, if the service recipient (principal) was in India, service tax would be applicable.
---
If you want, I can help draft a short summary note or provide the exact sections and notifications involved. Would that help?
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