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Service tax on agency commission

Queries 1195 views 4 replies

Dear Tax Experts,

One of our client is govenment company registerted under Company Act.Government transfers lumpsum amount to this company.This company awards contract to contractors and get this work done.For this it gets commission at fix rate and pays the rest amount to party.Does this commission collected by company falls under defination of commission and does it had to pay service tax on commission income?If no then kindly provide case laws?

 

Replies (4)

Yes, service provided by the company would be liable to service tax. The activity of company is service. and it is in the nature of intermediary.

Definition  of intermediary:

"intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account;

Liability would be arise only on Commission portion. However, I would recommend you to pre plan for the litigation, as dept. may ask you to pay tax on the amount received for futher distriution. Though, it is not taxable.

We are study abroad consultants in india. We arrange admissions of indian students in Australia,Canada,Newzealand and Singapore. We do not charge consultation fees from students. We get commissions from Foriegn universities/colleges in india ( Foriegn currency). There is no intermediate indian company involved between us and foriegn university. Do we need to pay service tax on these commissions? 

Surely you are liable to pay ST on commission. The place of provision of service is the Location of Service Provider.

As university is based in Newzealand and canada with no india office or intermediator. even then service tax is applicable?


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