Commission reciept

[Asked by Guest]

Dear Sir,

Mine is a proprietorship company in India. I am acting as an agent/consultant to a foreign company for export of goods of one country to another country (not India). For this , exporting company is remitting commission to my account in India. ( say 2 to 5% of invoice value)

For this any TDS, service tax , and income tax applicable.

From the commission received in above case ,I have to pay back 50 % to a Foreign agent who is partner in this particular business. Whether I have to deduct tds, service charges/income tax

Please help me in giving correct advice.

thanks and regards

Gopal Shetty

[YAGAY and SUN]

Dear Gopal,

For query number 1 please check POPS Rules of Service Tax Laws in this regard. For query number 2 service tax would not applicable but check the provisions of FEMA before remitting the money out of India.

Regards,

YAGAY and SUN

(Consultants - Business, Management and Indirect Taxation)

Dear Sir,

In the above question , my main point , whether I can receive commission in India from foreign countries for the consultancy done in foreign countries . Is there any FEMA restrictions. Kindly help in giving advice in this matter.

Regards

Gopal Shetty

[kalyanaraman Venkatraman]

It is covered under FEMA current Account Transactions, there is no restrictions under FEMA for the payment.

with respect to the deduction of TDS, contract between you and your partner has to be checked. if it is on sharing basis and you are receiving the full amount and giving his share then it is a diversion of income and No TDS is applicable.

AI Summary

FEMA current account transactions allow receipt of foreign commission in India; verify tax and service tax implications.
Tax treatment and foreign exchange compliance for commissions received in India from a foreign principal require checking service tax under the Place of Provision of Services rules and examining the contractual sharing arrangement: service tax likely not applicable where services are rendered abroad; if the proprietor receives full commission and then remits a partner's share as a diversion of income under a sharing contract, TDS may not be required. Receipt and remittance are governed by FEMA current account provisions and must follow applicable FEMA procedures.