Service Tax on Foreign Commission

[KALYAN CHAUDHARY]

Hi,

We have booked the foreign commission on dated 31.03.12 and write off in the month of april,2012 (next financial year) then service tax applicable or not ?

With Regards

Vipan Kumar

[sanjeev bajaj]

Please elaborate and clarify your query.

[Rajesh Sharma]

Hi Vipan,

In case of foreign commision service tax is payable only at the time of payment of such commission, so if the said amount is reversed service tax would not be applicable.

Regards

Rajesh sharma

AI Summary

Service tax on foreign commission: levy arises on payment; reversal before payment removes liability in practice. Service tax on commissions to foreign agents is triggered by the time of payment; liability arises on actual payment, not mere accounting recognition. If a commission entry is reversed or written off before payment, no service tax is exigible because the point of taxation (payment) has not occurred.