31 July 2012
Assessee (XYZ)located in India registered with Service Tax under Business Auxillary Service and Business Support Service.Assessee is assisting a foreign service provider (ABC) located outside India of survey online by collecting subscription money locally from local distributors of ABC AS IT HAS BEEN APPOINTED as collecting Representative of ABC in India.A local distributor of ABC will remit funds into the account of XYZ. Then XYZ will inform ABC that funds have come from local distributors and ABC issues invoice in favour of distributors and forwards the same to XYZ. Then XYZ will remit funds to ABC account located outside India. For this service XYZ is charging 0.25% consideration of the amount remitted to ABC .Now my query is as to whether Service Tax is chargeable on 0.25% of the remitted amount kept by XYZ as his commission or on the whole amount collected by XYZ and then remitted by XYZ to ABC.wILL THE SERVICES BE UNDER bUSINESS AUXILLARY SERVICES ?. The period in 2010-2011, 2011-2012.
31 July 2012
So far as XYZ is concerned, it is giving service against 0.25%.. It shall pay service tax on that amount. Since your service receiver is a foreign entity, service tax person might get confused to charge service tax on XYZ. May 2005 circular says that foreign entity giving service in India is exigible to service tax.
31 July 2012
Sir, Regarding the prior periods, service tax is applicable on .25% only.
However, May i raise an additional observation on the matter presented by Mr.Shiv W.E.F 01-07-12 As per the Section 66B, "There shall be levied a tax (hereinafter referred to as the service tax) at the rate of twelve per cent on the value of all services, other than those services specified in the negative list, provided or agreed to be provided in the taxable territory by one person to another and collected in such manner as may be prescribed."
The new Place of provison of service rules under Rule 3 provide that place of provision of service is the place of the reciepient ( in this case being the place of the principal, M/s abc) WHICH IS OUTSIDE INDIA AND HENCE OUTSIDE TAXABLE TERRITORY.
so, can the charging section apply to commision received by XYZ (Agent) from the principal ABC from now on?
Experts, Please provide your opinions on the matter.
CAclubindia
