Marketing for foreign company - export of services

[Asked by Guest]

An Indian Company doing marketing promotion in india for a US based company and procuring order from indian market and sending them to US Co. Against this services Indain Co. getting 10% commission for sale in Indian territory. Whether this will be treated as export of services.

[Madhukar N Hiregange]

The marketing services if merely of sourcing orders would be covered under BAS and export is said to be there when the same is provided to a recipeint outside India + delivered outside India + used outside India + receoived in convertible foreign currecny. If all these conditions are met thenit is a Export.

The important test is if your are dependent agent or independent agent. If you are dependent agent of principal abroad, his income for this business is taxable in India then obviously service is delivered by you for his business in India and therefore not an export. If you are independent agent, then income tax is payable in principal's own country and you have delivered service to them abroad for use in business abroad. Then it is export of service. Just think otherwise, if you export goods to USA, Germany, Canada and wherever, your business is said to be business in India as you are assessed to Income tax on these exports in India only and not each individual country you ship to. Same for imports, if someone ships from USA to India his business is in USA. So whatever Business Auxiliary service you deliver to them is for their business abroad.

AI Summary

Export of services depends on delivery and use outside India, convertible currency receipt, and agent independence.
Export treatment for marketing services hinges on meeting export conditions-service provided to a recipient outside India, delivered outside India, used outside India, and paid in convertible foreign currency-and on the agent relationship: a dependent agent whose principal's income is taxable in India will not qualify the service as export, whereas an independent agent whose principal is taxable abroad will support export classification.