Service tax on commission received of amway

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

13 March 2014
Dear sir,

we are received 'commission received' statement from Amway. In this statement shown as two types of commission (Personal & Differential). The company says Service Tax applicable only on Differential commission. Not applicable on Personal Commission. Please clarify in this issue.

Thanking You
BALASUBRAMANYAM
TIRUPATI
MOBILE NO : 919703003029

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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13 March 2014 what is the reason for deduction in t\both cases?

Querist : Anonymous

Querist : Anonymous (Querist)

13 March 2014 is service tax applicable on personal commission received from Amway in the capacity of Agent?

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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24 July 2025 Hi Balasubramanyam,

Regarding your query on **service tax applicability on commissions received from Amway** — particularly on **Personal Commission vs. Differential Commission** — here’s a clarification based on typical service tax principles:

---

### 1. **Personal Commission:**

* This is generally commission earned on your own direct sales.

* Usually, this commission is **considered as income from sale of goods**, not a service, because you act as a **principal selling the product** directly.

* Therefore, **service tax is not applicable on personal commission**, since no separate “service” is rendered here; it’s more like trading activity.

---

### 2. **Differential Commission:**

* This commission is often earned on the sales made by your downline or network.

* In network marketing or multi-level marketing models, differential commission is **considered as remuneration for the “service” of promoting and facilitating sales** by others.

* Thus, differential commission is treated as **service income** and **liable to service tax**.

---

### Summary:

| Commission Type | Service Tax Applicability |
| ----------------------- | --------------------------------------------- |
| Personal Commission | **Not applicable** (considered sale of goods) |
| Differential Commission | **Applicable** (considered service income) |

---

### Reason:

Service tax is levied on **services**. Personal commission arises out of your own sale of goods and hence treated as sale proceeds, not service income. Differential commission, on the other hand, is a **fee for service** rendered by managing/promoting the sales network.

---

### About TDS Deduction:

* Service tax on differential commission is generally deducted at source by Amway as per service tax rules.

* For personal commission, no TDS under service tax applies.

---

If you want, I can help you draft a clarification letter or guide you on compliance related to this.

Would that be helpful?

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