Availability of Service tax credit on Payment of service tax on Export Commission on reverse charge basis

[Yatin Bhopi]

1-We are the manufacturer exporter & wish to pay commission to overseas agents for the orders procured by them for us. Since they are NRI not having offices in India/Permanent establishment in India, we will have to pay service tax on export commission paid to them on reverse charge basis.

can we avail the service tax set off / credit on the same.

we don't want to follow Notification 18/2009 in the above matter.

 

[sv bhasker]

Sir,

You can avail the Cenvat Credit of Service Tax paid on reverse charge basis under Section 66A of FA,1994 as Rule 3 of CCR was amended suitably retrospectively from 18.4.2006 vide Finance Act, 2011 . Service Tax paid under Section 66A was made eligible for credit .

[SANJIV KOTHARI]

According to my understanding if commision is with in 10% FOB there is no requirement to pay service tax on export commission.

AI Summary

Cenvat credit on reverse-charge service tax for export commission may be available following amendment recognizing such tax as creditable. Service tax paid on export commission under the reverse charge mechanism was rendered eligible for Cenvat credit by the Finance Act, 2011 and corresponding amendment to the Cenvat Credit Rules made retrospectively effective from 18 April 2006, subject to satisfaction of the Cenvat regime's conditions; conversely, where commission is within the customary FOB threshold no service tax may be payable and credit issues would not arise.