Applicable or not

This query is : Resolved

Synonymous (Querist)
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10 February 2016 Dear All, one of my friend is doing business as broker. He sells goods of foreign supplier in India & in return he gets commission from foreign supplier. My question is that while prepairing balance sheet how to record this income. Whether he should treat this as indirect income & record in p& l account OR charge service tax & pay to government. Thanks in advance

Rohit A Kadam

Rohit A Kadam (Expert)
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10 February 2016 If this is a full time business / occupation that he is involved in through a registered business name then he should record this as profits / gains from business and should comply with the tax requirements.

Synonymous

Synonymous (Querist)
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13 February 2016 Which taxes are applicable can you explain in detail.

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Suresh Ramaswamy

Suresh Ramaswamy (Expert)
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13 February 2016 If your friend is engaged in the business of selling foreign goods in India for a commission, this is his main revenue from operations (presuming it is his major work). Revenue from Operations is direct income and not indirect income. Even though commission is treated as indirect income - Other Receipts, the same is applicable if the main operations result in other revenue. in your friends case it is his main revenue.

Your friend is rendering Business Support Services in terms of Finance Act 1994 (as amended). Hence if his annual commission income is in excess of Rs.9 lakhs, he should register himself with the Central Excise Authorities and start paying Service Tax once his revenue exceeds Rs.10 lakhs.

Since your friend does not import the goods, i.e.does not get title over the goods, and then sell them he is not a trader in the commodity (goods) and hence he is not subject to VAT / CST.