Input credit on commission payable

This query is : Resolved

HITESH KHONA (Querist)
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21 September 2011 Dear All,
I have an important and urgent query.

An automobile company is liable to pay commission including service tax to their agents. But suppose instead of paying commission, if the co provides the spare parts in exchange of commission payable, then can the company can claim input credit on the commission payable.

PN :- The amount paid as spare parts are always higher than the commission payable.

Please reply ASAP

Thanks in Advance
Regards

VISHRUT

VISHRUT (Expert)
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21 September 2011 Yes you can claim input credit as for the purpose of input credit it is not necessary to be paid in cash only in kind will also be allowed.

HITESH KHONA

HITESH KHONA (Querist)
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22 September 2011 Thanks for reply. Can u provide me the relevant section for this. It would be very helpful
Regards

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U S Sharma

U S Sharma (Expert)
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22 September 2011 during the process of transfer of parts, the valuation is taken , then the same is shifted to commission account,
this valuation is to be considered as commission.
service tax is to be charged by the commission receipent, not the payee (paid only in case of reverse charge for commission paid outside india), and the commission receipent has option to avail 10L exemption on commission recd.