Service Tax on Export Agent commission in FCY

PPP

Hi,

My company is into export business.
For some exports we give commissin to the Agents. Which is foreign currency. As per the Indian Tax System, we have to remit Serice tax to the govt for those commssion paid on behalf of them. Simular to GTA. So the agent will get the full amount, on top the service tax amount is calculated and paid directly to the govt. I found a method of doing in navision using GTA functionality.

I have created a Service Tax group as Commission and identfied the the Agent as GTA in the vendor master and created a Purchase Journal.

For e.g 1000 US$ is the commission amount.

In the purchase Journal i have selected GTA Service Type as Outward GTA input service and then the commissino a/c

When i am posting this journal,l i am getting this Party account credited to 1000 US$/equal amount in LCY and the Service tax account with the amount. In short my purpose is solved using this way.,

I just wanted to confirm with you experts, that whether this is the right way of doing it and is there any issue in doing like this.

Expecting your valuable advise.

Thanks
PpP

ssingla

If you are able to acheive the required results then I don't think there is any problem but you need to be cautious that Outward GTA does not entitle you to receive Service Tax/Cenvat Credit.

PPP

ssingla wrote:

If you are able to acheive the required results then I don't think there is any problem but you need to be cautious that Outward GTA does not entitle you to receive Service Tax/Cenvat Credit.

Thanks for the reply.

Infact if i give Inward GTA as GTA Service Type , still it post the accounts perfectly.

ssingla

It will post more or less in same fashion in both the cases except that in Inward GTA you can avail service tax/cenvat credit after you have deposited the service tax amount with the government.

PPP

thanks a lot