commission received from foreign universities

[satbir singhwahi]

Commission is received from foreign universities for students sent to that universities. Whether exempt as export of service.

[Guest]

If you are acting on Principal to Principal basis, then will be treated as export of service and not taxable. If acting as intermediary, then will be taxable as place of provision of service would be India.

[Rajagopalan Ranganathan]

Sir,

Rule 6 A of Service Tax Rules, 1994 defines export of service as  provision of any service provided or agreed to be provided shall be treated as export of service when,-

           (a)  the provider of service is located in the taxable territory ,

           (b) the recipient of service is located outside India,

           (c) the service is not a service specified in the section 66D of the Act,

           (d)  the place of provision of the service is outside India,

           (e) the payment for such service has been received by the provider of service in convertible foreign exchange, and

           (f) the provider of service and  recipient of service  are not merely establishments of a distinct person in accordance with  item (b) of ²[Explanation 3] of clause (44) of section 65B of the Act which states that -

   Explanation 3.–– For the purposes of this Chapter, -

      (a) an unincorporated association or a body of persons, as the case may be, and a member thereof shall be treated as distinct persons;

      (b) an establishment of a person in the taxable territory and any of his other establishment in a non-taxable territory shall be treated as establishments of distinct persons.

In view of the above provisions your activity will be qualified as export of service and is exempt from service tax.

AI Summary

Export of service: commission for placing students abroad qualifies as export when Rule 6A conditions are met, exempt from service tax. Commission for placing students with foreign universities qualifies as an export of service and is exempt from service tax where Rule 6A conditions are met: provider in taxable territory; recipient outside India; service not specified in exempt categories; place of provision outside India; payment received in convertible foreign exchange; and provider and recipient are not merely establishments of a distinct person. The supplier's acting on a principal-to-principal basis supports export treatment; acting as an intermediary may render the service taxable due to place of provision being India.