Service tax
This query is : Resolved
05 February 2016
If my client is having distributor ship of idea cellular which provides recharges to retaillers then is there a service between distributor and company[idea)?
06 February 2016
Yes the service is of Commission agent i.e. business support services.
10 February 2016
What will be the taxable value?
24 July 2025
In your client's case — acting as a distributor for Idea Cellular and providing recharges to retailers — the nature of the transaction is considered a "commission-based intermediary service", typically falling under Business Auxiliary Services (pre-2012) or Business Support Services, and later under Intermediary Services in GST.
✅ Taxable Value in Service Tax (pre-GST era):
Definition of Taxable Value:
As per Rule 6(1) of the Service Tax (Determination of Value) Rules, 2006, the taxable value is the gross amount charged by the service provider for such service rendered.
🔹 In Your Client’s Case:
If the distributor receives commission or margin from Idea Cellular (e.g. ₹5 on every ₹100 recharge sold),
Then that commission amount alone is the taxable value.
✅ Not the full recharge value (i.e., not ₹100),
❌ Only the commission/margin (₹5) is subject to service tax.
📌 Example:
Description Amount
Recharge MRP ₹100
Purchase price from Idea ₹95
Distributor margin ₹5
Taxable value ₹5 only
Service tax (@14%) ₹0.70
So, your client pays service tax only on ₹5, not on the recharge value.
✅ Taxable Value in Service Tax (pre-GST era):
Definition of Taxable Value:
As per Rule 6(1) of the Service Tax (Determination of Value) Rules, 2006, the taxable value is the gross amount charged by the service provider for such service rendered.
🔹 In Your Client’s Case:
If the distributor receives commission or margin from Idea Cellular (e.g. ₹5 on every ₹100 recharge sold),
Then that commission amount alone is the taxable value.
✅ Not the full recharge value (i.e., not ₹100),
❌ Only the commission/margin (₹5) is subject to service tax.
📌 Example:
Description Amount
Recharge MRP ₹100
Purchase price from Idea ₹95
Distributor margin ₹5
Taxable value ₹5 only
Service tax (@14%) ₹0.70
So, your client pays service tax only on ₹5, not on the recharge value.
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