query on Export of Services

Queries 614 views 2 replies

shiv shankar

IS AUDITING

27 Points Joined December 2008

an assesse which is a commission agent, registered under Business Auxiliary services is developing market and clients in INDIA for foreign companies as well Indian companies. to the extent of commission recieved in Indian rupees the assessee is paying service tax but not on the foreign commission recieved in convertible foreign exchange citing Export services rules,2006 as the money is not expatriated back. Is it correct in view of the fact that the service is being actually rendered in India. kindly guide me. I am really elated to have such a enlightened camraderie of Auditors.thanks CAclub.

kindly reply soon,

shiv shankar Ghosh, CISA

Replies (2)

Madhukar N Hiregange

Chartered Accountant

39039 Points Joined September 2008

The development of markets is a coming under marketing activity which culminates in the exporters outside India being able to sell in India. This is covered under Business Auxiliary Service.

Under export of service rules the recipient of the services should be outside India [ here exporter is outside India] The usage of the services is in my view also outside India as once the market is developed it would enable to exporter outside India to DECIDE to manufacture and export.

The client who is interested is only interested in orders from India. He pays monies for ensuring that happens.

Satish

CA Final Student

479 Points Joined September 2008

Dear Shiv Shankar, Please refer to the circular of the department by clicking the following link https://www.servicetax.gov.in/st-cirmainpg.htm. In your case performance of service in india does not in any ways distort the nature of export of service provided the other conditions given in the Export of service Rules, 2005 shall be satisfied.