Service tax on commission

Greetings,

My company is an India based company which acts as a buying agent for our client based in USA. My company recives commission from the Indian manufacturer though. We are paid in INR by the manufacturer after the succesful completion of the transaction. The transaction is directly performed between the buyer and the seller and is 100% export oriented. Should we charge Service Tax to the buyer?

Any help would be greatly appreciated. 

Replies (9)
Dear Sir. It appears from your query that Service is provided by you in India i.e taxable territory and it is being paid to you by buyers located in India, you shall be liable to pay Service Tax.

Thank you so much from your prompt response. I was reading through the Mumbai exceise website and came across this.

 

Q.12.1) Whether the services provided by a Commissioner Agent are taxable?

Ans”-  A Commissioner Agent is a person who causes sale or purchase of goods on behalf of another person for a consideration which is based on quantum of such sale or purchase.    Business auxiliary services provided by a Commission Agent are exempted from payment of service tax.

 

This FAQ answer on that website caused all the confusion. Can somebody please clarify the same?

What is the date of question/answer by Mumbai Excise ?

It is in their FAQ section with no dates mentioned.  Here's the link -> https://www.mumbaicentralexcisecbec.gov.in/faq.htm

It is question number 12.1. Thank you so much for your valuable replies. 

It was applicable before the changes made in the service tax, but in light of the changes made the FAQ is not tenable. Also as apparent from your question your company is receiving commission from the Indian Manufacturers and in Indian Currency, but it is not clear that whether the commission is received directly by you and whether or not you are raising any invoice for the same.

We are indeed raising an invoice in both USD and INR. The amount due is a certain % of total amount in USD. So we raise an invoice with amount mentioned in USD and then using the fx rate we also provide the INR amount. 

As you are raising the invoice in the name of the manufacturer based in taxable territory, and if your taxable turnover exceeds the amount of Rs 10 lac for the last year, you will be liable to pay ST, and the company after paying the ST amount to your company can claim refund for the Input used in the export. But as such service tax liability on commission earned is upon your company.

Thank you so much guys for your prompt responses. I will apply for a ST number tomorrow itself. 

Thanks for your query...

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