service tax on commission

[satbir singhwahi]

Is there service tax on commission received from Omax Ltd for sale of flats. Though annual total receipt of commission is less than 9 lacs.Whether 10Lacs basic 1st year exemption is available.

[Rajagopalan Ranganathan]

Dear Mr. Wahi,

Commission earned by you is the value of service rendered by you. Therefore if value service rendered in the previous financial year is less than ₹ 10 lakhs you need not pay any service tax. If you are new service provider or provide the service for the first time you have to file a declaration with the department stating that to value of service to be provided by you is not likely to exceed ₹ 10 lakhs during the financial year.

[Mahir S]

Yes Sir, 10 Lacs exemption in the first year is available, as explained above.

If commission received is less than Rs. 9 lacs, then no need for registration nor payment of service tax.

[satbir singhwahi]

commission is received from Omax Ltd ( branded service) so basic exemption not available.For commission other than branded the limit of 10 Lacs will be there.

AI Summary

Service tax on commission: first-year exemption may apply for new providers; branded commissions can be excluded.
Commission for facilitating property sales is taxable as the value of services rendered; new service providers may claim a first year exemption by filing a declaration that their service value will not exceed the threshold, and if aggregate receipts remain below the registration threshold registration and payment obligations do not arise. Commissions associated with a branded service may be excluded from the basic exemption depending on factual characterization.