DIFF BETWEEN COMMISSION AND TRADE DISCOUNT

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WHAT IS DIFFERENCE BETWEEN TRADE DISCOUNT AND COMMISSION ?

KINDLY DO THE NEEDFUL FOR THE SAME WITH AN EXAMPLE

AI Summary

Understanding Trade Discounts vs. Commissions: Tax Implications Under Section 194H Explained A forum discussion addressed the difference between trade discounts and commissions, emphasizing their distinct tax implications under Indian law. Trade discounts are price reductions granted to enhance sales and are not subject to tax deduction at source (TDS) under section 194H, as they do not involve an agency relationship. In contrast, commissions are compensations for services rendered in sales or transactions, involving a principal-agent relationship, and are subject to TDS. Various court rulings, including those from the Gujarat High Court, clarified these distinctions, noting that trade discounts do not attract VAT/CST, while commissions may involve service tax.