Is Service Tax Applicable for Services Rendered to a Foreign University?

[Guest]

Hello! I have a question about our overseas education business. We are an overseas education agency based in India and we market Foreign Universities that provide education courses in the UK & USA to Indian Students. For every student recruited from India by our agency, we receive commission in foreign exchange from the said Foreign Universities.

Please keep in mind that we do not charge service tax to the foreign universities, as they do not allow us to do so since they are based in the UK & USA. Thus I have the following questions under the below scenario for exemption of service tax.

As a result:

1. Is service tax applicable on the commission payment made to us in foreign exchange or are we exempt from it?
2. If service tax is levied on our foreign commissions then what date would this be applicable from?
3. If we have to pay service tax OUT OF POCKET on our commission payment made to us in foreign exchange, then this leads to double taxation as explained here: For Every Student Commission of ₹ 10,000 we pay OUT OF Pocket ₹ 1,500 as Service Tax. Additionally, on the balance ₹ 8,500 assuming we have expenses of ₹ 1,500 then we also pay income tax on the profit of ₹ 7,000 as well. Isn’t this double taxation?
4. As a result of this double taxation, can we get rebate or refund from the Service Tax Department. If so, under what scheme?

Thanks for your help!

Kunal

AI Summary

Indian agency questions service tax on foreign commissions for student recruitment; debates export exemption and intermediary role. An Indian overseas education agency queries about the applicability of service tax on commissions received in foreign exchange from UK and USA universities for recruiting Indian students. The agency does not charge service tax to the universities and seeks clarity on whether such commissions are subject to service tax, potential double taxation issues, and eligibility for rebates. One respondent argues service tax is applicable as the service is provided in India, while another clarifies that the service qualifies as an export, exempting it from service tax. The discussion also touches on whether the agency acts as an intermediary under service tax rules.