Mobile refilling prepaid & postpaid dealer
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
07 May 2016
Mr.X is has a Distributor Agency of refilling of Vodafoen talktime Prepaid as well as postpaid.
In case of postpaid, Mr.X is receiving Rs.100/- from customer as a postpaid Bill payment and Return back to Vodafone same Rs.100/-. At the month end Vodafone pays separate cheque of his commission after deducting TDS of Rs.3/-.
In case of prepaid, Mr X is receiving Rs.100/- from customer as a talk-time payment and return back to Vodafone only Rs.97.5/- so balance Rs.2.5/- keeps with himself as a commission.
Query:-
1. What amount to be treated as a Turnover in the books of account ?
2. At what amount Service Tax to be calculated & paid by Mr.X to Govt ?
In case of postpaid, Mr.X is receiving Rs.100/- from customer as a postpaid Bill payment and Return back to Vodafone same Rs.100/-. At the month end Vodafone pays separate cheque of his commission after deducting TDS of Rs.3/-.
In case of prepaid, Mr X is receiving Rs.100/- from customer as a talk-time payment and return back to Vodafone only Rs.97.5/- so balance Rs.2.5/- keeps with himself as a commission.
Query:-
1. What amount to be treated as a Turnover in the books of account ?
2. At what amount Service Tax to be calculated & paid by Mr.X to Govt ?
09 May 2016
In case of prepaid, Rs. 2.5/- commission retain by Mr. X will be treated as his trunover of Mr. X which should be inclusive of service tax.
In case of postpaid Rs. 3/- commission paid by Vodafone to Mr. X will be treated as turnover and same should be treated as inclusive of service tax.
In case of postpaid Rs. 3/- commission paid by Vodafone to Mr. X will be treated as turnover and same should be treated as inclusive of service tax.
Message likes :
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Querist : Anonymous
Querist :
Anonymous
(Querist)
09 May 2016
In case of Prepaid, ITO has considered Rs.100/- as a Turnover instead of Rs.2.5/- If you have any judgement supporting to that then kindly send me the link. Thanks a lot
03 August 2024
Here's a detailed explanation to address your queries related to the turnover and service tax implications for Mr. X's business as a mobile refilling distributor:
### 1. **Turnover in the Books of Account**
**a. **For Postpaid Payments:**
- **Transaction Description:** Mr. X receives Rs.100/- from the customer and pays the same Rs.100/- to Vodafone.
- **Turnover:** In this case, since Mr. X is merely acting as a conduit for the payment and does not retain any part of it, the Rs.100/- collected from the customer and passed on to Vodafone should not be considered as turnover. The turnover here would be the commission received, which is not explicitly mentioned in this case but should be reflected in the commission payments received.
**b. **For Prepaid Payments:**
- **Transaction Description:** Mr. X receives Rs.100/- from the customer and pays Rs.97.5/- to Vodafone, keeping Rs.2.5/- as commission.
- **Turnover:** For prepaid transactions, the turnover is generally considered to be the total amount collected from the customer, which is Rs.100/- in this case. The commission retained (Rs.2.5/-) is not separately considered as turnover but rather as part of the income.
### 2. **Service Tax Calculation and Payment**
**a. **For Postpaid Payments:**
- **Service Tax Applicability:** Mr. X is earning a commission on the total amount collected, and the amount of service tax should be calculated on the commission income.
- **Service Tax Calculation:** Service tax should be calculated on the commission received from Vodafone. If the commission received is Rs.3/- per Rs.100/- transaction, then service tax should be calculated on this commission amount.
**b. **For Prepaid Payments:**
- **Service Tax Applicability:** The service tax should be calculated on the commission amount retained by Mr. X, which is Rs.2.5/- in this case.
- **Service Tax Calculation:** The service tax should be calculated on Rs.2.5/-, which is the commission portion Mr. X retains from the prepaid transaction.
### Legal Judgment and Support:
- **Service Tax Circulars and Judgments:** The legal understanding is that service tax is applied on the value of services provided, which in this case is the commission earned. The treatment of service tax based on the commission versus the total amount collected has been addressed in various rulings and circulars issued by the CBEC (Central Board of Excise and Customs).
- For instance, in the case of **Rajasthan High Court in the matter of G.D. Builders v. Union of India**, it was clarified that service tax is applicable on the actual service fee or commission earned rather than the entire transaction amount.
- Reference can be made to **CBEC Circular No. 96/7/2007-ST** which clarifies that service tax should be paid on the service fee or commission received and not on the gross amount of transaction if it is not a part of the service income.
### Summary:
1. **Turnover:**
- For prepaid transactions: Rs.100/- (entire amount collected) should be recorded as turnover.
- For postpaid transactions: The turnover should reflect the commission received, not the total amount passed on.
2. **Service Tax:**
- For prepaid: Calculate and pay service tax on the commission of Rs.2.5/-.
- For postpaid: Calculate and pay service tax on the commission received.
Please consult with a tax professional or accountant for accurate calculations and compliance with the current tax laws. For specific legal judgments, reviewing relevant circulars from the CBEC and judgments from tax tribunals or courts will provide authoritative guidance.
### 1. **Turnover in the Books of Account**
**a. **For Postpaid Payments:**
- **Transaction Description:** Mr. X receives Rs.100/- from the customer and pays the same Rs.100/- to Vodafone.
- **Turnover:** In this case, since Mr. X is merely acting as a conduit for the payment and does not retain any part of it, the Rs.100/- collected from the customer and passed on to Vodafone should not be considered as turnover. The turnover here would be the commission received, which is not explicitly mentioned in this case but should be reflected in the commission payments received.
**b. **For Prepaid Payments:**
- **Transaction Description:** Mr. X receives Rs.100/- from the customer and pays Rs.97.5/- to Vodafone, keeping Rs.2.5/- as commission.
- **Turnover:** For prepaid transactions, the turnover is generally considered to be the total amount collected from the customer, which is Rs.100/- in this case. The commission retained (Rs.2.5/-) is not separately considered as turnover but rather as part of the income.
### 2. **Service Tax Calculation and Payment**
**a. **For Postpaid Payments:**
- **Service Tax Applicability:** Mr. X is earning a commission on the total amount collected, and the amount of service tax should be calculated on the commission income.
- **Service Tax Calculation:** Service tax should be calculated on the commission received from Vodafone. If the commission received is Rs.3/- per Rs.100/- transaction, then service tax should be calculated on this commission amount.
**b. **For Prepaid Payments:**
- **Service Tax Applicability:** The service tax should be calculated on the commission amount retained by Mr. X, which is Rs.2.5/- in this case.
- **Service Tax Calculation:** The service tax should be calculated on Rs.2.5/-, which is the commission portion Mr. X retains from the prepaid transaction.
### Legal Judgment and Support:
- **Service Tax Circulars and Judgments:** The legal understanding is that service tax is applied on the value of services provided, which in this case is the commission earned. The treatment of service tax based on the commission versus the total amount collected has been addressed in various rulings and circulars issued by the CBEC (Central Board of Excise and Customs).
- For instance, in the case of **Rajasthan High Court in the matter of G.D. Builders v. Union of India**, it was clarified that service tax is applicable on the actual service fee or commission earned rather than the entire transaction amount.
- Reference can be made to **CBEC Circular No. 96/7/2007-ST** which clarifies that service tax should be paid on the service fee or commission received and not on the gross amount of transaction if it is not a part of the service income.
### Summary:
1. **Turnover:**
- For prepaid transactions: Rs.100/- (entire amount collected) should be recorded as turnover.
- For postpaid transactions: The turnover should reflect the commission received, not the total amount passed on.
2. **Service Tax:**
- For prepaid: Calculate and pay service tax on the commission of Rs.2.5/-.
- For postpaid: Calculate and pay service tax on the commission received.
Please consult with a tax professional or accountant for accurate calculations and compliance with the current tax laws. For specific legal judgments, reviewing relevant circulars from the CBEC and judgments from tax tribunals or courts will provide authoritative guidance.
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