RULE 9 POP RULES

[puneet virmani]

'A' COMPANY IN SRILANKA SUPPLIES MACHINERY TO 'B' COMPANY IN JAPAN. MY CILENT IN INDIA 'C' GETS THE COMMISSION FROM 'A' COMPANY FOR PROCURING ORDER FROM 'B' COMPANY.

BOTH THE SUPPLIER AND THE BUYER OF THE MACHINERY ARE LOCATED OUTSIDE INDIA. WHETHER COMMISSION RECEIVED IN INDIA BY 'C' IS TAXABLE AS PER NEW POP RULES.

[Rajagopalan Ranganathan]

Sir,

According to Rule 2 (f) of POP Rules, 2012“intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main' service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account."

According to Rule 9 of POP Rules, 2012 the place of provision of intermediary services shall be the location of the service provider. In your case the intermediary service is provided by 'C' who is located in India (taxable territory). Since the intermediary service provider is located in taxable territory 'C' is liable to pay service tax.

[PAWAN KUMAR]

Dear Sir,

The view of Sh.Rajagopalan Ranganathan is correct. Though C is a service provider and providing service to company A and receiving commission. As per rule 9 of POPS the place of provision of service in case of intermediatery service is location of service provider, therefore service provider is liable for service tax on commission received.

[JAGANATHAN KUMARAVEL]

Sir

As the income is in the nature of export of service , will C not exempt from Service Tax.

I do agree your views in the case of import of goods

AI Summary

Place of Provision rule for intermediary services: commission received by domestic agent remains taxable as provider's location. Under Rule 9 of the POP Rules the place of provision of intermediary services is the location of the service provider. An intermediary is a broker, agent or facilitator who arranges provision of a service between parties but does not provide the main service on his own account. Therefore commission earned in India by an Indian intermediary for procuring a contract between two foreign entities is treated as provided in the taxable territory and is liable to service tax, subject to any applicable export of services exemption conditions.