Liabilty of service tax

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rajiv

business

31 Points Posted on 09 January 2016

Dear Members,

Would like to know from the forum members the liability of service tax in the below mentioned transcation:

'A' is a partnership company that is paying commission to 'B' 'C' 'D' & 'E' which are its commission agents for four zones . All agents B,C,D & E are proprietory/ individual/ partnership firm and their yearly commission received is well under Rs. 10.00 lacs from all sources.

'A' is paying approx Rs. 6-8 lacs as commission to each agent totalling about Rs. 31 lacs for the financial year.

My question is : Is 'A' company paying commission to agents liable to pay any sercive tax as the total commission outgo is about 31 lacs though all the receiving agents fall with in the 10 lakh limit individually

would highly appreciate the members clarification on the above transcation

TIA

Replies (3)

Mayur Kashinpure

Student

308 Points Posted on 09 January 2016

Originally posted by : rajiv
	Dear Members, Would like to know from the forum members the liability of service tax in the below mentioned transcation: 'A' is a partnership company that is paying commission to 'B' 'C' 'D' & 'E' which are its commission agents for four zones . All agents B,C,D & E are proprietory/ individual/ partnership firm and their yearly commission received is well under Rs. 10.00 lacs from all sources. 'A' is paying approx Rs. 6-8 lacs as commission to each agent totalling about Rs. 31 lacs for the financial year. My question is : Is 'A' company paying commission to agents liable to pay any sercive tax as the total commission outgo is about 31 lacs though all the receiving agents fall with in the 10 lakh limit individually would highly appreciate the members clarification on the above transcation TIA

Please take note of the fact that Small Service Provider's exemption is available to service provider. Hence, the cumulative outflow of service recepient is irrelevant.
In your case, since the individual agent has turnover less than Rs. 10,00,000, they are eligible to claim SSP exemption.
Also, you will be required to deduct TDS @ 10% on the payments made to the agents since the payments made are well above the threshold.