Valuation of Service Tax on Commission paid to Foreign Agent

Pawan Pandey (Querist) 29 October 2009 This query is : Resolved
Sir,

We are paying service tax as service receiver on commission paid to foreign agent as export sales commission.

We are computing service tax for payment on cum-tax basis.

Now department has asked we are calculating Service Tax wrong. We have to pay Service tax on commission amount.

Please suggest.

Thanks
Pawan Pandey

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Arul Kumar (Expert) 30 October 2009
As per section 67 of the Service Tax Act the value of taxable service will not be the amount charged by the service provider, but will be the cost of the service to the service receiver. Thus you have to pay Service Tax on the Commission. Eg. If the Commision Is Rs.100/- then you have to charge Service Tax on Rs.100/- not treat this Rs.100/- as cum-Tax. i.e. on cost you have to calculate the Service Tax.

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