TaxTMI 
TaxTMI 
Dear Sir,
My company is providing Desktop/Laptops to dealers for reselling and giving Percentage based incentive on Billing Value. Whether Service Tax is applicable on the incentive received by Dealer?
Service Tax on Target Based Incentive to dealers
15 Sep 2013 
1 Reply 
3994 Views Asked by
Service tax applicability on dealer incentives hinges on whether payments constitute commission for services or mere promotional expenditure.
Service Tax applies to percentage based incentives to dealers when those payments function as regular commission or remuneration for the dealer's business activity on behalf of the supplier, thus constituting consideration for a taxable service. Payments that are promotional expenditures or incentives to purchasers who buy and resell goods, and not remuneration for services performed for the supplier, are not subject to Service Tax. (AI Summary)
Service Tax applies to percentage based incentives to dealers when those payments function as regular commission or remuneration for the dealer's business activity on behalf of the supplier, thus constituting consideration for a taxable service. Payments that are promotional expenditures or incentives to purchasers who buy and resell goods, and not remuneration for services performed for the supplier, are not subject to Service Tax. (AI Summary)