Exemption on commission

[Guest]

An agent of a bank providing marketing services is getting a commission of 4.50 lac per annum. Is there any exemption from service tax available to him.

[avadhK sharma & ASSOCIATES]

For the Financial Year 2006-2007 First Rs. 4,00,000/- are not taxable - provided he does not have nay other taxable services. On balance also all service tax input available under Cenvet credi rules are available. For the Financial Year 2007-2008If he is a new assessee No Service tax is payable. Avadh

[Guest]

The service per se fall under Business auxiliary service. However, from 1.4.07, threshold limit of service tax exemption is increased to Rs.8.00 lakhs per annum from Rs.4.00 lakhs. This is an optional exemption available for small service providers, upto which no service tax is chargeable/payable.

AI Summary

Service tax threshold exemption for small service providers permits non-liability for commission income below the optional limit. Commission for marketing services is classifiable as Business auxiliary service. For FY 2006-2007 the first Rs.4,00,000 of such receipts were not taxable provided no other taxable services were rendered; input tax credit is available on the balance. From 1.4.2007 an optional threshold limit was raised for small service providers so that providers below the revised ceiling, including new assessees for 2007-2008, may have no service tax payable.