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1.Can exporter pay export commission @25% of FOB Value.

May-12th-2010

1.Can exporter pay export commission @25% of FOB Value.

2.Does exporter is require to deduct TDS since the agent does not have permanent establishment

3.Does exporter is require to pay service tax on Export Commission paid.

Prakash Sabadra

Replies

  1. Editor Said,

    Dear Sir

    Exporter are not require to pay service tax on export commission paid to agents located outside India vide service tax notification no 18/2009 dated 7th July 2009. You can download the notification from “http://www.servicetax.gov.in/servtax_notfns_idx.htm”

    Your question regarding the commission @ 25% of FOB value, I would like to inform you that as per above notification exemption of service tax is limited to maximum 1% of FOB value.

    Regarding the deduction of TDS on overseas commission :- Before 22.10.2009 there was not required to deduct TDS on overseas commission vide CBDT circular no 786, dated 7th February, 2000. But CBDT withdraw this circular w.e.f 22.10.2009 vide circular no 7/2009 [F. NO. 500/135/2007-FTD-I], DATED 22-10-2009.

    As per SC judgment in the case of Transmission Corpn. of A.P. Ltd. vs. Commissioner of Income-tax [1999] 105 TAXMAN 742 (SC) payer should file an application before Assessing officer u/s 195(2) for grant the certificate to pay without deduction of tax otherwise he is liable to deduct TDS.

    For details of TDS on overseas commission you can go through an article heading “Overseas Commission and TDS” published on our site.

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  2. Prakash Sabadra Said,

    Thank You

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