Service tax on commission

[Guest]

Buying Agent (Indian Company) gets mandate from overseas company for importing certain product.Buying Agent Identifies a suitable Indian exporter.Direct order on Exporter is arrnged.Buying agent helps exporter in product development,control and monitors quality on behalf of Importer.On completion of export gets commission for services performed from overseas importer.Is a buying agent indian company liable to pay service tax on commission received in convertable foreign exchange.Such services although performed from India has been used outside India(i.e.) by Importer.

[Surender Gupta]

These issues are border line issues appears to be export of services. Apparently, the activity involved is attracted service tax. This activity is export or not must be decided in the context of detailed study of all the aspects of the contract and legal happenings that are bound to arise in future.

[Guest]

No. The service is exported outside India.

AI Summary

Export of services: buying-agent commissions in foreign exchange may be treated as exported services, affecting service tax liability. Whether an Indian buying agent's commission received in convertible foreign exchange for services performed from India but used outside India is liable to service tax. One reply finds the activity potentially taxable and urges detailed contractual and factual analysis to determine if it qualifies as an export of services; another reply treats the service as an export of services and not subject to service tax.