Commission to Foreing Agent

[JAGANATHAN KUMARAVEL]

Please let me know the current provisions relating to the service tax liability on commission paid to an agent abroad for procuring orders to be exported from India. (Garment Industry)

AI Summary

Service Tax Exemption on Foreign Agent Commissions in Garment Exports Clarified; Applies Post-Export Per Notification No. 18/2009-ST. A query was raised regarding the service tax liability on commissions paid to foreign agents for procuring export orders in the garment industry. It was clarified that under Notification No. 18/2009-ST dated 7.7.2009, such commissions are exempt from service tax if certain conditions are met. Otherwise, service tax is applicable under Section 66A of the Finance Act. Both respondents agreed on the applicability of the exemption, emphasizing that the exemption applies when the commission is paid after the export, not in advance.