Today we are discussing on Service tax on commission agent after the amendment made in place of provision of service.Government of India has amended the definition of intermediary in Rule 2(f) with rule 9 of Place of provision of service tax rules Via Notification No 14/2014 ST dated 11th July 2014.
Definition of intermediary Upto 30/09/2014
“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) between two or more persons, but does not include a person who provides the main service on his account.
Definition of intermediary WEF 01/10/2014
“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.
(II) Effect of Amendments –
Change in the definition of Intermediary will affect the Commission income of importers agent and commission income of exporter’s agent.
Upto 30/09/2014 service tax on commission agent is covered under Rule 3 of Place of provision of service after amendment in the definition of intermediary service tax on commission agent is covered under Rule 9 of Place of provision of service.
As per Rule 3 of Place of provision of service (POP) Rules 2012, Place of provision is location of service receiver.
As per Rule 9 of Place of provision of service of (POP) Rules 2012, Place of provision is location of service provider
(III) Service tax on Commission Agent in case of Exports of Goods
Commission paid to the agent outside India for facilitating exports is covered under Rule 3 of place of provision of service, after 01st October 2014 it is covered under Rule 9 of place of provision of service.
Upto 30/09/2014 – Commission paid to agent outside India for helping exports of Goods is covered under Rule 3 of POP. As per Rule taxability will depends on location of service receiver.
In that case service provider (commission agent) is located outside India and Service receiver (dealer whose goods are exported) is in India. As service receiver is in India commission paid for exports of goods is taxable. However partial exemption was provided by Notification No 42/2012 ST dt 29th July 2012
After Amendment WEF 01/10/2014 – Commission paid to agent outside India for helping exports of Goods is covered under Rule 9 of Place of provision of service (POP). As per Rule taxability will depends on location of service Provider.
In that case service provider (commission agent) is located outside India and Service receiver (dealer whose goods are exported) is in India. As service Provider is located outside India commission paid for exports of goods is not taxable.
(IV) Service tax on Commission Agent in case of Import of Goods
Commission paid to the agent in India for facilitating Imports is covered under Rule 3 of place of provision of service, after 01st October 2014 it is covered under Rule 9 of place of provision of service.
Upto 30/09/2014 – Commission paid to agent in India for helping Imports of Goods in India is covered under Rule 3 of Place of provision of service (POP). As per Rule taxability will depends on location of service receiver.
In that case service provider (commission agent) is located in India and Service receiver (dealer whose goods are exported) is located outside India. As service receiver is outside India commission paid for imports of goods is not taxable.
After Amendment WEF 01/10/2014 –
Commission paid to agent in India for helping Imports of Goods in India is covered under Rule 9 of Place of provision of service (POP). As per Rule taxability will depends on location of Service Provider.
In that case service provider (commission agent) is located in India and Service receiver (dealer whose goods are exported) is located outside India. As service Provider is in India commission paid for imports of goods is taxable.
Is Reverse charge applicable on Import Commission Income
No, Reverse charge is not applicable on import commission income , as it is an direct income. Reverse charge will be applicable if person has done some expenses and on that expense he has pay the service tax.
