Service tax on referal fees/commission received from foreign firms for intrducing clients to them

[Mujtaba Hussain]

Kindly let me know wether referal fees/commission received in US dollars from foreign firms for introducing clients to them comes under service tax. If so when the notification to this has come into effect.

[Dinesh Gupta]

There are various cases in which commission received from foreign supplier for referring Indian Buyers as export of services and consequently exempt from service tax. The case of blue star [2008 TMI - 3606 - CESTAT BANGALORE] and other subsequent decisions confirms this stand.

AI Summary

Export of services: referral commissions from foreign firms for introducing clients can be treated as service tax exempt.
Whether referral fees or commission received in foreign currency from foreign firms for introducing clients constitutes a taxable service. Several authorities have treated such commissions as export of services and consequently exempt from service tax, with the Blue Star tribunal decision and later rulings cited in support.