Service Tax on Commission to be recieived from Foreign Subsidiary

[Pradeep Jain]

Our Company  had issued a corporate guarantee  to Foreign Bank at out side of India on behalf of our subsidiary in Switzerland, AVTEC (Europe) Power-train Limited. For this purpose we have raised an invoice of CHF 71,877/- on our subsidiary on 31^st Mar 13 for commission for providing the above said  Corporate Guarantee

Please advice whether service tax will be applicable on the same.

 Regards

 

Pradeep Jain

[YAGAY and SUN]

No it will be treated as Export of Service. For details please also check Place of Provision of Services read with Point of Taxation Rules

AI Summary

Export of service: commission for overseas corporate guarantee treated as outside service tax under place of provision rules.
Commission invoiced by an Indian parent to its foreign subsidiary for issuing a corporate guarantee is treated as export of services where the recipient is located outside India; taxability and timing are governed by the Place of Provision of Services rules read with the Point of Taxation Rules, and such qualifying cross-border services are not subject to Indian service tax at source.