Service tax applicability on Commission paid to foreign company

[Guest]

A UK based company procure order in uk for an indian Co. UK company also collect payment in UK for services porvided by indian co. For these services commission is to be paid to UK Co. Whether service tax has to be paid on this commission payble to UK co.

[Surender Gupta]

Service tax is payable in India as Import of Service - "Business Auxilary Service" - see rule 3(iii) of "Taxation of Services (Provided from Outside India and Received in India) Rules, 2006"

AI Summary

Import of Service: commission paid to foreign intermediaries is taxable as Business Auxiliary Service, making the Indian recipient liable. Service tax applies to commission paid to a foreign intermediary procuring orders and collecting payments abroad for an Indian principal, classified as import of service under the Business Auxiliary Service category of the Taxation of Services rules, rendering the Indian recipient liable for service tax on the commission.