Service tax on trading

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

07 February 2012 whether service tax is leviable on trading if some service is involved in trading out of which some portion of service is taxable or some is non taxable.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
Follow

07 February 2012 please mention exact nature of service

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
Follow

24 July 2025 Here’s the lowdown on **service tax on trading with some service involved**:

---

### Key points:

1. **Pure trading (buying and selling goods only)** is **NOT subject to service tax** because it’s a transaction of goods, not services.

2. However, if **services are involved as part of trading**, then **service tax applies only on the service portion** — not the entire trading value.

3. If your trading activity includes both taxable and non-taxable services, service tax will be applicable **only on the taxable services**, proportionate to their value.

---

### Example:

* You sell goods worth ₹1,00,000.
* You also provide after-sales support (which is taxable service) valued at ₹10,000.
* Service tax applies only on ₹10,000, not on the entire ₹1,00,000.

---

### Summary:

* **Service tax on trading = Service tax only on the value of taxable services involved in the trading activity.**
* Pure sale/purchase of goods = No service tax.

---

If you want, I can help you identify what part of your trading activity is taxable service and calculate the tax liability. Want me to help?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now