St for agents/service providers of foreign companies

This is a confusing topic for my and I have saked around, with different people giving me different answers.

1. Indian company (Abc) is an agent for a foreign company (Fc). They get paid on commission basis for all the sales they do for their products.

2. Abc does not deal with any transaction of any kind for the exchange of goods between the supplier Fc and their customer in India

3. At the end of every month Abc will send an Invoice to Fc for all sales made and Fc will pay the commission.

4. Fc will transfer the commission to Abc's account in USD or Euro.

Now must Abc pay Service Tax for the commission received?

Some people say that ST must be paid only if the amount exceeds Rs. 10L every quarter.

Some say it is necessary to pay. But I am confused since Abc acts as a service provider of Fc which exempt.

Case 2:

If a software developer sells the same software to both Indian companies and Foreign companies, then he/she needs to pay service tax only when the software is sold in India. When sold outside India the payment is tax exempt. Is this true?

Thank you, Deepak 

Replies (1)

Case-1 As per Rule 9(c) of Place of Provision of Service Rules,2012 place of provision in case of intermediary services is lcoation of service provider.In case of Commision agent service place of provision is location of service provider.

Thus,in case the intermediary services provided by Indian co to foreign co then the service is taxable as location of Indian co. is India,so service tax is chargeable on commision charged by Indian co.

Thus,apparently it may seem that the service is export,however,since its place of provision is in India as per Rule 9(c) its taxable and not export.

Case 2-Sale of pre-packaged software is not service but pure sale.Sale of customized software is chargeable to service tax but in case customized software developed for foreign country , then service is not taxable bcoz as per Rule 3 of Place of Provision of Service Rules the place of provision is location of service receiver(i.e Foreign country).

Thus, it will be export of service provided the 6 conditions as specified in rule 6A of ST Rules,2012 is fulfilled.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
14 October 2026
Accountant

Rize.farm

Bengaluru

B.Com

View Details
Company
Featured 29 October 2026
Accounts Executive

Synergy Keystone

Chennai

B.Com

View Details
Company
Featured ARTICLESHIP 31 October 2026
CA Articleship

apricus india

Navi Mumbai

CA Inter

View Details
Company
ARTICLESHIP 17 October 2026
Articled Assistant

RRPM & Associates LLP

Chennai

CA Inter

View Details
Company
Featured ARTICLESHIP 28 October 2026
CA- Inter and Articles

N N V Satish & Co.,

Hyderabad

CA Inter

View Details
Company
19 October 2026
Accountant

Jari Saree Center

New Delhi

Others

View Details
Company
ARTICLESHIP 08 October 2026
ARTICLE TRAINEE

S.B.G. & CO. CHARTERED ACCOUNTANTS

New Delhi

CA Inter

View Details
Company
ARTICLESHIP 07 October 2026
Article Assistant

Malhotra Rajesh & Associates

New Delhi

B.Com

View Details