service tax for MLM company

[SUSHIL MODAK]

My client is engaged into MLM business  which collects Rs 1500 from members and gives them a joining kit of Total Value Rs 150. 

Now Suppose i Show the bifurcation of Rs 1500 as Follows

a) Rs 200 for sale of product.

b)One time membership fees rs 1300 as registration fees.

---Question

1)Than whether service tax would be applicable on above Rs 1300 if yes than under which service it would        come for registration.

2)    What would be the remedy to avoid service tax liabilty.

[ALOK GUPTA]

The term MLM is not clear. Please inform its full form. only then the classification of the service is possible. As regards the taxable value, the Service Tax is chargeable on gross amount collected from members i.e. Rs. 1500/- in terms of section 67 of the Finance Act, 1994, read with Service Tax [ Determination of Value] Rules' 2006. because Joining kit is an integral part of the membership.

[Views expressed are personal in nature] 

[imran khan]

tell me about all tan in mlm company.

[imran khan]

tell me about all tax in mlm company

AI Summary

Service tax applicability: membership collections including bundled joining kits are treated as taxable gross receipts under valuation rules. Service Tax is chargeable on the gross amount collected from members where a joining kit is an integral part of membership; the full receipt forms the taxable base under the valuation rules. Classification for registration requires more factual detail about the MLM operation.