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 and SUN]

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..

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

AI Summary

Service tax on trade incentives: characterization as taxable service depends on principal to principal trading or agency and negative list treatment.
Whether incentives, discounts or commission received by a partnership firm from suppliers or manufacturers attract service tax as a taxable service under Business Auxiliary Services depends on characterization: payments linked to principal to principal trading are not services, whereas payments tied to an agency relationship may be taxable; trading activity exemptions under the negative list support non taxability of discounts and incentives integral to sale of goods.