Levy of service tax on activities involved in relation to inward remittances from abroad to beneficiaries in India through MTSOs- reg.

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....oner of Customs and Central Excise (All) Commissioner of Central Excise and Service Tax (All) Commissioner of Service Tax (All)             Madam/Sir, Subject: -  Levy of service tax on activities involved in relation to inward remittances from abroad to beneficiaries in India through MTSOs- reg.      Vide circular No. 163/14/2012-ST, dated 10th July, 2012, on the issue of  levy of service tax on the activities involved in the inward remittance it was clarified that there is no service tax per se on the  foreign exchange remitted  to India from outside for the reason that money does not constitute a service and that conversion ....

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....rges a fee from 'A'. Step 2:  'B' avails the services of an Indian entity (agent) (say 'C') for delivery of money to the ultimate recipient of money in India (say 'E');  'C' is paid a commission/fee by 'B'. Step 3: 'C' may avail service of a sub-agent (D). 'D' charges fee/commission from 'C'. Step 4: 'C' or 'D', as the case may be, delivers the money to 'E' and may charge a fee from 'E'. 3.   Clarifications have been sought as to whether such agents (referred in Step 2 above) would fall in the category of intermediary, and if so, whether service tax would be leviable on the commission/fee amount charged by such agents. Clarifications have also been sought as to whether the services provided by sub agent (refe....

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....le territory) to MTSOs located outside India? Service provided by an intermediary is covered by rule 9 (c) of the Place of Provision of Service Rules, 2012. As per this rule, the place of provision of service is the location of service provider. Hence, service provided by an agent, located in India (in taxable territory), to MTSO is liable to service tax. The value of intermediary service provided by the agent to MTSO is the commission or fee or any similar amount, by whatever name called, received by it from MTSO and service tax is payable on such commission or fee. 4. Whether service tax would apply on the amount charged separately, if any, by the Indian bank/entity/agent/sub-agent from the person who receives remittance in th....