Upen (Finance Professional) (26 Points)
09 September 2015Dear Sir / Madam
We provide admission service to Universities Abroad (In Australia, USA etc...). Their qualification are recognized in India and equivalent to Indian qualification. is our service to University exempted under services relating to admission ?
Note: In this case University paying us for admission services. We are not charging student.
Regards
Upen
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 09 September 2015
not correct
as your service is not a part of carriculam, you are neither employed with the unversity on salary basis, nor you are their branch head in india. so the amount paid to you is purely commission on contract. hence tax can not be denied on it.
Zarra.Belal.Nomani
(CS Final B.com CA Final.)
(167 Points)
Replied 12 September 2015
Upen
(Finance Professional)
(26 Points)
Replied 22 September 2015
Thanks to all. Please reply to one more Question: Can our service fall under Export of Service to foreign universities ?
Rajesh Kumar
(Advocate- Tax)
(7806 Points)
Replied 22 September 2015
You are providing servives to a foreign university. As per Place of Provision of Services Rules, place of provision of services are outside India. As Service Tax is payable only when place of provision of services are in India, in my view Service Tax is not payable.
However in case of intermediary, place of provision is deemed to be the place where intermediary is located. But in your case, it appears that you are not an intermediary- Rule 2(f) defines that ‘intermediary services’ to mean a broker, any agent or any other person, by whatever name called, who arranges or facilitates a provision of a service(hereinafter called the ‘main service’) between two or more persons(it doesn’t include a person who provides service on his own account).
It appears that you are providing admission services to foreign universities on your own account. As such it is not an intermediary services, and place of provision of service is outside India,i.e. location of service receiver.
The definition of export of services, in Rule 6A of Service Tax Rules is not useful. It defines various conditions- and condition (d) says that place of provision of services should be outside India! If the place of provision of services is outside India, no Service Tax is payable. How can somebody exempt export of services, when no tax is payable in any case! This is a legislative drafting error, and let us see how much time Government will take it to rectify it. In your case, place of provision of services is outside India, it is an export of service too.
Upen
(Finance Professional)
(26 Points)
Replied 24 September 2015
Thank you very much Rajeshji. I appricate your help.
Please share your opinion, Mr. Sharnma dn Mr. Nomani. Please guide.
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 25 September 2015
if the payment is received in free convertible foreign currency, then it may have some benefits, but if collected from indians who seek admission, then taxable, (reason: the service is provided to the indians not to university)
Vikas
(CA)
(1135 Points)
Replied 25 September 2015
Dear Upen,
To some extent, I disagree with all the aforesaid views, as the nature of service is not provided in detail.
Please note that a service can only be taxed if provided within the taxable territory (i.e., India excluding Jammu and Kashmir). To determine the location where services have been provided, you need to refer to various rules prescribed under the Place of Provision of Services Rules, 2012 (PPSR).
In your case, I understand that you have been appointed by the University to facilitate admission to the qualified students. It is not clear whether you determine their eligibility by conducting some test or such students are identified directly by the University. This fact could be crucial to further examine the provisions.
Thus, it is relevant to refer to Rule 9(c) of the PPSR, which refers to an intermediary service and determines the location of the intermediary to be the place of provision of service. Hence, if you are determined as an ‘intermediary’, your service would be taxable. As per Rule 2(f) of the PPSR, “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;
Hence, one may note that the mere assistance in providing admission services to the foreign Universities could be facilitation services. Thus, your services should qualify as an ‘intermediary’ services and thereby be taxable.
Further, to your second query, once, it is determined that the place of provision is in India, your services cannot qualify for ‘export of services’.
However, let me caution you. The facts provided by you are very less. The exact details of activities performed by you may also make other rules under PPSR be applicable.
Its better to take professional consultants help in such cases.
Madhukar N Hiregange
(Chartered Accountant)
(39034 Points)
Replied 27 September 2015
It appears to be covered by Rule 9 of the POPSR as intermeidairy.
If you fit in there then you need to pay ST if services exceed Rs. 10 Lakhs in pr yr.
If you are only provding business support to University then you maybe an exporter of service and nor liable and eligible for refund.
Mani115
(Director)
(34 Points)
Replied 08 December 2016
We are study abroad consultants in india. We arrange admissions of indian students in Australia,Canada,Newzealand and Singapore. We do not charge consultation fees from students. We get commissions from Foriegn universities/colleges in india ( Foriegn currency). There is no intermediate indian company involved between us and foriegn university. We promote foriegn universities programs in india. Do we need to pay service tax on these commissions?
Sunil Kumar
(Indirect Taxation )
(1246 Points)
Replied 08 December 2016
Surely you are liable to pay ST on commission. The place of provision of service is the Location of Service Provider.
If any query left. Feel free to ask.
Regards
Sachin Verma
(4 Points)
Replied 25 March 2017
Sachin Verma
(4 Points)
Replied 25 March 2017
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 25 March 2017
Two different incidents
1) the payment is made direct to university in foreign exchange, and university pays back the commission (or whatsoever to agent, does not matter) then place of service is confirmed out of taxable territory. ST not applicable
2) the payment is made to agency in indian rupees, and the service receipent is not aware that how much of the amount is sent to university, and by what process, ST applicable on whole the amount paid in INDIAN RUPEES.
Now a third scenerio
Part of carriculam is paid in foreign exchange and some amount is paid in indian rupees, here the ST is applicable on the indian rupees amount paid.
CAclubindia
