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

[Asked by 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

Export of service exemption applies to commission received in foreign exchange unless intermediary classification makes place of provision India.
Qualification for export of service depends on the provider being located in India, the recipient being outside India, payment received in convertible foreign exchange, and the place of provision being outside India; commissions received from foreign universities in foreign exchange are presented as export of service and not taxable, but classification as an intermediary can make the place of provision India and render such receipts taxable.