Remittance of export commission to foreigner

Dear Members 

We are a company in the export of leather and leather goods.We are exporting the goods to Japan and a japanese person is arranging orders for us.We are paying a handsome amount of commission to him.We are having the following queries

i.Is service tax applicable in case we are remitting commission to japanese national?

ii.Do we need to deduct the witholding tax or tds ?If yes what will be the rate of tax to be deducted ?

iii.Is there any maximum limit of the commission to be paid abroad by RBI/FEMA or any other relevant act ?

iv.What is DTAA between India and Japane on this point ?

Please reply referring the exact provisions of the Act.

Thanks/With Regards 

Ahmad

Replies (1)

1) Service Tax is destination based tax. Therefore neither you (as per reverse charge mechanim) and nor your agent will required to pay service tax.

2)As per Circular no-23 dated 23/07/1969, the commission paid to the Non-resident agent of the Indian Exporter for services rendered outside INDIA is not chargeable to tax in India.

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