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TaxTMI 
WHAT IS DIFFERENCE BETWEEN TRADE DISCOUNT AND COMMISSION ?
KINDLY DO THE NEEDFUL FOR THE SAME WITH AN EXAMPLE
DIFF BETWEEN COMMISSION AND TRADE DISCOUNT
27 Aug 2011 
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Trade discount excluded from commission TDS under section 194H where transactions are on a principal to principal basis.
Commission is remuneration to an agent for services (typically a percentage of transactions) and requires a principal agent relationship; trade discount is a price reduction in a sale between principals. Therefore, statutory TDS provisions applicable to commission do not apply to ordinary trade discounts absent an agency element. Courts have applied this distinction in tax and excise valuation, and commission may attract service tax while trade discounts do not attract VAT/CST. (AI Summary)
Commission is remuneration to an agent for services (typically a percentage of transactions) and requires a principal agent relationship; trade discount is a price reduction in a sale between principals. Therefore, statutory TDS provisions applicable to commission do not apply to ordinary trade discounts absent an agency element. Courts have applied this distinction in tax and excise valuation, and commission may attract service tax while trade discounts do not attract VAT/CST. (AI Summary)