09 December 2015
Hello Experts, Kindly let me know if a company in India raising export invoices to its group companies all over the world for commission on sale of goods that has taken place locally in India is liable for Service Tax to be paid in India by the company located in India.
09 December 2015
Service Tax Should be Charged @14.5%.
Refer:-Commission Agents located in India who receive commission on booking of orders or sale of goods from overseas based Principals have been subjected to service tax at the rate of 12.36% (Now 14.5%) of the commission received w.e.f. 1.10.2014.This is result of the amendment in the Place of Provision of Services Rules which govern the taxability of service and the service provided by a commission agent located in India will be deemed to have been provided in taxable territory. Till now the service was non-taxable as the place of provision of commission agent’s service provided to a non-resident was the location of service receiver (non-resident) under earlier rules. Henceforth, the place of location of an agent will be the place of rendering of service, irrespective of the receipt of commission in foreign exchange.
The definition of "intermediary" has been amended, to include the intermediary of goods in its scope, vide Place of Provision of Services (Amendment) Rules 2014 notified vide Notification No.14/2014-Service Tax which is effective from 1st October 2014
"intermediary" means a broker, an agent or any other person, by whatever name called, who arranges or facilitates a provision of a service (hereinafter called the 'main‘ service) or a supply of goods, between two or more persons, but does not include a person who provides the main service or supplies the goods on his account;
An intermediary of goods, such as a commission agent or consignment agent is now covered under rule 9(c) of the Place of Provision of Services Rules; which will have application on all commission agents located in India.
21 December 2015
As per Place of Provision of Services Rules, 2012 Rule 3. Place of provision generally - The place of provision of a service shall be the location of the recipient of service: Provided that in case the location of the service receiver is not available in the ordinary course of business, the place of provision shall be the location of the provider of service.
Since the recipient of service, group companies are outside India, it is exports, hence exempt. Please request experts to clarify again.
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