TaxTMI 
TaxTMI 
Mr. x has a dealer ship of M/s.y company. At year end Y company has a issue a credit note for additional incentive payable on achieving quantum of business to Mr.X. Y Company has also deducted TDS u/s 194H. In such case whether Mr.X is liable for Service Tax or Not?. Please guide us.
Service tax liability on discount/incentive
21 Apr 2015 
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Service tax: dealer incentives credited by a principal typically not taxable when the payment relates solely to goods distribution.
Whether a year end credit note issued by a principal to a dealer as an additional incentive for achieving sales targets attracts Service Tax. Respondents advise that where the arrangement is confined to trading in goods and the credit note reflects a commercial rebate or incentive connected to goods distribution, it does not attract service tax; taxability depends on the nature and purpose of the payment rather than issuance of a credit note or TDS deduction. (AI Summary)
Whether a year end credit note issued by a principal to a dealer as an additional incentive for achieving sales targets attracts Service Tax. Respondents advise that where the arrangement is confined to trading in goods and the credit note reflects a commercial rebate or incentive connected to goods distribution, it does not attract service tax; taxability depends on the nature and purpose of the payment rather than issuance of a credit note or TDS deduction. (AI Summary)
