Payment of commission, cash discount & rebates to customers

This query is : Resolved

N.Nagarajan (Querist)
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31 December 2012 Dear All,

We are paying commission, cash discount, rebate to our Agents on behalf of customers. since he makes the payment on their behalf.for commission Agent is raising service tax bills on us. for which we are accounting and deducting TDS.

For Cash Discount and rebate we are getting bills from Agent without service tax added on it.

But in the recent changes in service tax in the negative list whatever may be the income to agents( receiver ) he needs to add service tax on bills and remit to the government.

Now the Agents in order to avoid service tax on his bills against us he wants us to give the Cash discount and rebate as Interest to him. since he arranges financial facilites from Bank and paying us the amount within due days.

Can we give the Cash Discount and Rebates as Interest payment to Agents. Kindly clarify.

Thanking you,

N.Nagarajan
M.No: 9442594927