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Service Tax Applicability on Commission Income

Posted by: [email protected] on 12/12/2020 11:39 AM

  • My client from Ankleshwar doing Trading in Cement & Steel.
  • We are Distributor of ACC Ltd, Steel Authority Of India, Trinetra Cement Ltd.
  •  
  • In F.Y 2015-16, 2016-17 & April 2017 To June 2017 we have received Sales Commission from the above parties as under :-
  •  
  • Year                                                              Amount Rs
  • 2015-2016                                                    37567-00                                
  • 2016-2017                                                    78825.50
  • 2017-2018 (April 2017 To June 2017)             0
  •  
  • During the Audit of Service Tax EA 2000, the Audit Superintendent raised the query that we have to pay Service Tax on Sales Commission which we have received from the Steel & Cement Company against completed the sales target given by them during the above period.
  •  
  • Kindly advise us whether we have to Pay Service Tax or not with detail reply.
  •  
  • Thanking you
  • Bharat B Bhavsar
1 Reply Add Reply
Added by TaxField

On perusal of your query it appears that your client is not liable to pay Service Tax being the commission income received by him is far below the threshold limit of Rs.10 lakh by presuming that your client is not availing Cenvat credit of input services for providing commission services and there is no other service provided by him excluding the services where payment is liable to be under reverse charge mechanism (RCM).

In view of the above, you may write to the department that your client's turnover is below the threshold limit of Rs.10 lakh during above financial years and therefore the same is exempted vide Notification No.33/2012-ST dated 20.6.2012, thus no Service Tax is payable in above scenario and request them to drop the audit objection.
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