Foreign Service

[Guest]

Dear Sir,

Recently we have availed service from foreign overseas Commission Agent, we have received Export order for the same, now we have paid Commission to foreign overseas Commission Agent in Foreign exchange, we have liable to pay service tax under reversal Charges?? Please advise.

[Brijesh Verma]

Technically YES, but u can avail benefit of exemption under 42/12 notification. However w.e.f. FA 2014 (last year) this transaction is outrightly exempt (unconditionally)

[MUKUND THAKKAR]

Sir,

in addition of above. contract between your over seas agent and between your company must be their for availing the exemption under notification 42/12.

AI Summary

Reverse charge liability for overseas commission payments can be negated by statutory exemption and contractual compliance. Payment of commission to a foreign overseas commission agent is prima facie taxable under the reverse charge mechanism, but notification 42/2012 provided exemption and the Finance Act 2014 made such transactions unconditionally exempt; claiming the notification based exemption requires a contract between the overseas agent and the Indian company.