Service Tax on discount received

An assessee pays Rs. 2200 ( 2000 room tarriff + 200 luxury tax ) to a hotel for his business guest's stay.

The hotel gives back a cheque of Rs. 700 i.e. 35% discount on room tarriff to the assessee.

These type of transactions occur frequently during the year due to nature of business of assessee.

Whether the assessee is liable for any service tax on this discount income of the assessee?

If yes, then under which category?

ask the hotel to reduce the billing amount, to avoid service tax, otherwise its commission and subject to service tax. 

Service Tax will surely attract.

Thanks for the reply.

Under which head service tax is payable?

commission and brokerage. 

hi........

i import a display screen and on this screen charge import duty and screen display advertisement on which we charge servise tax can we take the credit of import duty against servise tax payble?

Originally posted by : hitesh
	hi........   i import a display screen and on this screen charge import duty and screen display advertisement on which we charge servise tax can we take the credit of import duty against servise tax payble?

sure, u can avail input credit of CVD portion paid as input credit on capital goods. 

Case 1)     If you recd the pymt advice or credit note alongwith chq for discount- No service tax will be applicable if you recd the credit note from the Hotel mentioning that the amt of INR 700 or 35% discount on the traiff rate.  You have to simply book this credit note in your books of accounts by crediting the Expenditure a/c & debiting the Hotel a/c.  So no service tax will be applicable.  Further I think the hotel is not deducting any tds u/s 194H on your this pymt. 

Case 2)  If you don't recd the above documents then it will be problem for you to satisfy the service tax authorities that the said amt is a discount & you will be liable to pay the service tax on the same through reverse calculation.  This amt will be considered as Commission or brokerage & will be taxable under the taxable category of Business Auxiliary Services.

Hi........ Govid,

Service Tax shall not be applicable on discount amount. Discount amount is considered while calculating theashold limite of the Room tarrif.

Thanks

Lalit