Charge of Service tax

[Asish Kumar Nath]

We are a trading unit proprietorship company. we are register with service tax. 

In some cases we paid commission to some individuals or company against sales and in some cases we also received commission  on sales also.

Now my question in 1st case shall we charges service tax on commission on sales and deposit it to govt. a/c?

In 2nd case where we receive the commission shall we calculate service tax and deposit to govt. a/c?

As per my knowledge service tax is exampted upto 10 lakhs servisable turnover. If it is correct how we concider the rule in our cases. We paid maximum Rs4 lakhs as commission and receive maximum 1 lakhs in a year.

Please help me in this matter.

Asish Kumar Nath

[Shyam Naik]

It is presumed that you are not providing any other taxable service. In that event, you are eligible for the exemption of Rs. 10 Lakh, provided the taxable turnover during the previous year is also Rs. 10 lakh or Less. And hence you are not required to charge on the commission received by you(2nd case).

In the 1st case, you are not required to deposit service tax on the commission paid by you. It is the responsibility of the person receiving the commission. Whether such persons are eligible for small Scale exemption of Rs. 10 Lakh depends on their taxable turnover and nothing to do with how much commission you have paid.

[Asish Kumar Nath]

Thanks.

I understand that if we received commission then only we have to pay service tax. We are also register with SSI.

No we have not provide any other service. As we are trader and importer, we use to file VAT, Excise and TDS. Last year our total sales turn over  on trading was 1.5Crore. Are we cross the limit of 10Lakhs.

Pleae clear me once again.

 

Asish Kumar Nath

[Shyam Naik]

The exemption of Rs. 10 lakh is with respect to taxable services only and have nothing to do with other sales/turnover. Accordingly you are eligible for the exemption.

AI Summary

Service tax exemption for small taxable turnover shields commission recipients from tax when turnover is below the threshold. Commission received constitutes a taxable service and counts toward the recipient's taxable-service turnover; if that turnover falls within the Rs. 10 lakh exemption, no service tax is payable. Commission paid is not taxable in the hands of the payer; liability to pay service tax rests with the recipient, and a trader's goods turnover does not affect the small service exemption.