Commision on acc of Sale & purchase of motor vehicles & payout

[Varun Arora]

Dear Experts,

Please resolve my query.

I am engaged in the business of Sale & purchase of Motor Vehicles and holds franchisee of Mahindera First Choice.

And i am receiving Commision on account of Sale and purchase of motor vehicles from my customer as well as Payout from Mahindera first choice.

Please suggest whether service tax is applicable or not on commision as well as payout received.

Commision amount is 9 lacs and Payout amount is 3 lacs.

Thanks in advance.

AI Summary

Service Tax Applicable on Motor Vehicle Franchise Commissions Over 10 Lakhs; Consider VAT for Trading Activities An individual involved in the sale and purchase of motor vehicles, holding a franchise with Mahindra First Choice, inquired about the applicability of service tax on commissions and payouts received. The commissions amount to 9 lakhs and payouts to 3 lakhs. Experts in the forum advised that since the total amount exceeds the small-scale exemption limit, service tax is applicable. However, the first 10 lakhs is exempt. The discussion also clarified that if the commission is part of a trading activity, it might not attract service tax, but VAT might apply instead.