Service tax on commission received for export of goods

[JAGANATHAN KUMARAVEL]

A Company receives order for export of goods, the company in turn places back to back order with the manufacturer in India. On export of goods the Company has given standing instruction to their banker, to transfer 90% to the exporter of goods and transfer 10% only to its account as commission income. In the books the 10% amount is only considered as foreign commission income received .

Request clarification whether service tax is liable on the commission income received on export of goods. (Commission income received on import of goods is taxable under service tax now)

T.K. Jaganathan

AI Summary

Company Liable for Service Tax on 10% Commission for Export Orders Under Service Tax Regulations A company that facilitates export orders by directing a manufacturer in India to fulfill them receives a 10% commission on the transaction. The query seeks clarification on whether this commission is subject to service tax. The response explains that if the company merely procures the order and directs the manufacturer to export, the manufacturer is the exporter. In such cases, the company, being in a taxable territory, is liable to pay service tax on the commission income received from the export transaction.