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

Manufacturing exporter can claim Cenvat Credit on export commission under Section 66A, Finance Act 1994, with conditions. A manufacturing exporter inquired about the availability of service tax credit on export commission paid to overseas agents on a reverse charge basis, without adhering to Notification 18/2009. One response indicated that Cenvat Credit of Service Tax paid on a reverse charge basis is permissible under Section 66A of the Finance Act, 1994, due to amendments made by the Finance Act, 2011. Another response suggested that if the commission is within 10% of the Free on Board (FOB) value, there is no requirement to pay service tax on the export commission.