Service Tax on Discount/Incentive received.

[Gunjan Gupta]

If one Partnership firm, is receiving incentive and disounts from various suppliers/manufacturers for acheving certain targets or eceives eraly payment Incentive or Trade discount or Rate diffrence, will the said firm is liable to Pay Service tax on such incentive/discounts under 'Buisness Auxillary Services'. Will the veiw will change after the applicability of Negative list method.

[YAGAY andSUN]

Please check Section 66E in this regard.

[rajkumar shukla]

If incentive received is on account of trading on principal to principal basis , no service tax would be leviable as no service is involved. if targets incentives are given on principal to agent basis , tax would be payable..

[Guest]

Discount, commission or incentive received in relation sale of goods is a part of trading activity which is exempted from service tax.

AI Summary

Is Service Tax Applicable on Incentives and Discounts for Partnership Firms? Principal-to-Agent Basis Matters. A partnership firm inquired whether it is liable to pay service tax on incentives and discounts received from suppliers or manufacturers for achieving targets, early payments, or trade discounts under 'Business Auxiliary Services.' Respondents advised that if the incentives are received on a principal-to-principal basis, no service tax is applicable as no service is involved. However, if the incentives are received on a principal-to-agent basis, service tax would be payable. Additionally, discounts, commissions, or incentives related to the sale of goods are considered part of trading activity and are exempt from service tax.