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how to avail exemption for ST on foreign agent commission

Queries 1334 views 1 replies

Dear ALL

We want to avail Exemption on payment of service tax for commission being paid to foreign agent. As per notification the Central Excise Commissioner will give this Exemption but when we submitted the documents The Excise Department says this is not in our purview and this comes under Service Tax department whereas ST department also say it is Excise Department work. How we can avail this exemption.

 

Replies (1)

You will have to register with the Export Promotion Council and then approach department for waiver as per recent notification. However your service tax for waiver should not be more than 1% of FOB value realised. You should have the agreement (it should without fail specify that you are paying commission for the introduction of customer). Normally these agreements have to be drafted in such a way that they indicate this fact as well as the fact that final negotiation and binding is done by you with buyer on a principal to principal basis and the commission is paid to agent upon the transfer of risk, which in your case is when you receive payment/acceptance of your b/l. However, RBI allows only after realisation of payment.

 

Therefore you must ensure you do not pay more than 9.7% of FOB (that would result into service tax of 1 % of FOB).

Manufacturer exporter will be registered by Central Excise. Merchant Exporter by Service Tax on form A-2. Once you are registered with service tax and also have EPC registration, you can register for waiver. Otherwise if you register only with service tax, you have to pay first and then claim refund.


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