Reimburshment of expenes for C & F Agent
This query is : Resolved
04 May 2010
My client is receiveng incentive from company and the same amount pass on to various agent registered under C & F agent as per instruction of principal whether service tax on incentive received applicable or not.
04 May 2010
The activity undertaken by you, that is, promoting sales of buildings constructed by builders will come under the category of Business Auxiliary Services. As per the definition contained in Section 65(19) of the Finance Act, 1994, Business Auxiliary Services include "a service in relation to promotion and marketing or sale of goods produced by the client or promotion or marketing of services provided by the client."
As per Section 67 of the Finance Act, 1994, read with Service Tax (Determination of Value) Rules, 2006, effective from April 18, 2006, where the provision of service is for a consideration in money, the value of the taxable service will be the gross amount charged by the service provider, that is, the commission earned by you. Where the provision of service is for a consideration not wholly or partly in money, then the value of taxable service will be equal to the gross amount charged by the service provider for similar service to any other person as sole considerationIn your case, in addition to the money consideration, you are entitled for an incentive, the trip to Malaysia. This is a non-monetary consideration. But instead of taking the trip, you have opted for cash payment. This will be treated as a consideration or as the cash equivalent of non-monetary consideration for the service provided, apart from the commission already received. Hence, both will be taxed to service tax. Or in other words, the gross amount you receive for the service provided, including the incentive, will be taken into account for levying tax.
As per Section 67 of the Finance Act, 1994, read with Service Tax (Determination of Value) Rules, 2006, effective from April 18, 2006, where the provision of service is for a consideration in money, the value of the taxable service will be the gross amount charged by the service provider, that is, the commission earned by you. Where the provision of service is for a consideration not wholly or partly in money, then the value of taxable service will be equal to the gross amount charged by the service provider for similar service to any other person as sole considerationIn your case, in addition to the money consideration, you are entitled for an incentive, the trip to Malaysia. This is a non-monetary consideration. But instead of taking the trip, you have opted for cash payment. This will be treated as a consideration or as the cash equivalent of non-monetary consideration for the service provided, apart from the commission already received. Hence, both will be taxed to service tax. Or in other words, the gross amount you receive for the service provided, including the incentive, will be taken into account for levying tax.
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