Taxability of Service provided by FOREIGN BASED COMMISSION AGENT

[SANTOSH SHARMA]

What will be the position of service receiver and provider in the following situation after the amendment made in the definition of “INTERMEDIARY” in the rule 2 (f) which is mentioned in Rule 9 of Point of Taxation of Service, 2012. The situation are given below:-

1. If we are receiving service of foreign based commission agent to sell of our finished goods on the mutually agreed percentage of Commission linked to sale. Presently we are paying service tax under BAS on RCM under Noti. No. 30/2012 ST Dt. 20.06.2012 once we make payment to them.

2. If commission agent also engage sub-agent for providing said service outside India with or without our concurrence where we are liable to pay commission to both agents either directly or through main agent.

3. On the other hand, If we are also engaged in providing service to foreign based clients for selling their products in India as well as outside India and receiving commission in freely convertible foreign currency which presently we are treating it as “EXPORT OF SERVICE”.

4.The point of taxation where commission agent’s commission accrues when we get Export Proceeds in our Bank account as per the agreement between agent and us.

PLEASE THROUGH SOME LIGHT ON ABOVE ISSUE.

Regards,

SANTOSH SHARMA

AI Summary

Clarification Sought on Tax Liabilities for Foreign Commission Agents Post-2012 Amendment; Reverse Charge Mechanism Not Applicable. A discussion forum addresses the tax implications for services provided by foreign-based commission agents, particularly after amendments to the definition of 'intermediary' in the 2012 tax rules. The main queries involve the tax liability of service receivers and providers when engaging foreign agents for selling goods, the involvement of sub-agents, and the classification of received commissions as 'export of service.' Responses highlight that service tax under reverse charge mechanism (RCM) is not applicable if the foreign agent lacks an establishment in India. The forum also discusses the place of provision rules and the applicability of CENVAT credit.