Value of Taxable Service

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2011 I AM A DIRECT MARKETING ASSOCIATE SINCE LAST 10 YEARS AND I AM WORKING WITH ICICI BANK ON COMMISSION BASIS AND I HAVE TAKEN SERVICE TAX NUMBER UNDER BUSINESS AUXILARY SERVICES. IN THE YEAR 2006, SUPPOSE THE BANK GAVE ME A STATEMENT OF MY ACCOUNT STATING THAT I HAVE EARNED Rs. 1000 AS GROSS COMMISSION AND DEDUCTED Rs. 600 AS SUBVENTION MADE BY ME TO THE CUSTOMER AS EXCESS DISCOUNT. THUS IT GAVE ME A CHEQUE OF Rs. 360 AFTER DEDUCTING TDS OF Rs. 40 EFFECTIVELY AND STATED THAT IT IS INCLUDING SERVICE TAX AMOUNT. NOW PLEASE STATE ME WHETHER I AM LIABLE TO PAY SERVICE TAX ON Rs. 400 OR Rs. 1000.
THIS IS MY QUERY AND MY MOBILE NO. IS 9780888976.
PLEASE ANSWER.

THANKING YOU

RAJBIR SINGH

Querist : Anonymous

Querist : Anonymous (Querist)

01 May 2011 EMAIL ID - rbjaurasia@yahoo.co.in

MPBILE NO.- 97808-88976

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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02 August 2025 Let's break down your situation carefully:

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### Facts:

* Gross commission earned = Rs. 1,000
* Subvention paid back by you (excess discount) = Rs. 600
* Net amount paid to you (after TDS) = Rs. 360
* TDS deducted = Rs. 40
* The statement says amount includes Service Tax.

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### Service Tax Liability:

**Service Tax is payable on the full value of taxable service provided**, which is generally the **gross amount before any deductions** related to expenses or subventions.

In your case, since you earned Rs. 1,000 as gross commission for services rendered to ICICI Bank, **service tax liability would be on Rs. 1,000**, not Rs. 400.

* The Rs. 600 subvention is money you paid back to the customer as excess discount, which is a pass-through cost, **not a deduction from your service value.**
* Service tax is applicable on your gross commission income, not the net receipt after subvention.

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### Important points:

* The Rs. 1,000 is the **taxable value** for service tax purposes.
* The service tax should be calculated on Rs. 1,000 (or the commission amount stated before any deductions).
* TDS and subvention payments do **not** reduce the taxable value for service tax.

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### Summary:

You are liable to pay **service tax on Rs. 1,000** (gross commission), not on Rs. 400 or Rs. 360.

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If you want, I can help you calculate the exact service tax amount based on the applicable rate in 2006.

Would you like me to do that?

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