Service tax on commission received in foreign currency

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Krunal

Partner

29 Points Posted on 12 February 2015

Dear all,

One of my client has arranged purchase of goods from a foreign country for a buyer in another foreign country. He will be getting commission on this transaction in US $ from both parties, amounting to approx US$ 25,000/-.He has personally visited both the countries for getting & completing the order.

Now, my question is, whether my client is liable for registration under service tax & also for collection & payment of service tax?? Will it be term as "EXPORT OF SERVICE" as goods were procured & delivered outside India??

Replies (3)

Vikas

1245 Points Posted on 12 February 2015

Dear Krunal,

As per Service Tax Law, all the services provided in the taxable territory are taxable. To determine whether a service is provided within the taxable territory or not is determined vide the Place of Provision of Services Rules, 2012 (PPSR).

Post amendment in Rule 2(f) PPSR w.e.f. 1 October 2014, an ‘intermediary’ facilitating supply of goods would also be covered under Rule 9(c) of the PPSR, wherein the place of provision is the location of service provider.

In the instant case, the service provider i.e., the commission agent is located in India, thus, this service should be liable to Service tax.

Krunal

Partner

29 Points Posted on 12 February 2015

Thanks sir..but still I am confused that even if goods are procured from outside India and delivered also to outside India..only commission received in India in USD.. Will it be liable to service tax?