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.

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.