Purpose code of RBI and other related query

[Guest]

We are merchant exporter, a machinary in Congo requires installation and commissioning. So we send a person from Germany (manufacturer of machinary) for such Installation and Commissioning.The party from Germany raises a Bill in our name and we raises bill to the Congo Party.

How this transaction will be treated?

In which purpose code of RBI we can make payment and receive for such transaction?

Is there a need to close E-BRC?

Is TDS is required to be deducted?

Do we require FORM 15CA and 15CB also as there is no TDS to be deductible on such transaction.?

[YAGAY andSUN]

This transaction will be treated as services exported/imported under the FTP read with Place of Provisions of Services Rules. Provisions related to TDS, FEMA shall be adhered with.

[Guest]

How can it be treated as export service. We are just acting as an agent in between. Services are being exported from Germany. Kindly provide the link of relevant provisions.

[Ganeshan Kalyani]

The service element is there in the transaction mentioned in the query.

Can you prove that there is no profit element included by you while raising invoice by you on the actual recipient of service.

Anyway place of provision of service rules need to be referred.

[Kishan Barai]

According to me in above case we are only middle man receiving commission & no service export takes place.

AI Summary

Service export classification affects payment purpose code, TDS, and FEMA compliance for cross-border installation services. Classification of the arrangement hinges on whether the Indian merchant exporter's invoicing constitutes export of services or an agency/commission. Replies note the transaction is treated as services exported/imported under the Foreign Trade Policy and Place of Provision of Services Rules and that TDS and FEMA obligations must be adhered to. Divergent views focus on whether the Indian entity includes a profit element when billing the Congo recipient or merely receives commission as an agent.