One of my client is a trader importing goods and selling it in India. In the instances where my clients' customers import the goods directly, the supplier (foreign company) gives incentive to my client on the value of goods so exported directly to India. This incentive comes to him in form of a credit note which can be encashed by my client in money form or import of goods at nominal value. When he chooses to import goods than collecting money, he pays applicable custom duty etc. There is no written agreement between my client and the foreign company to the effect.
Following doubts come in my mind:
1. Whether the incentive so collected, whether in cash or in kind, is subject to service tax ?
2. Whether collecting the incentive as such comply and are in accordance with the rules and regulations of RBI ?
3. Is there any issue involved in the transaction from the perspective of any other compliance or law related matters in this transaction.
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