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
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
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?
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?
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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