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

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 per cent 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.

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