Service tax on mobile recharge
This query is : Resolved
16 October 2008
Hi,
Whether service tax is chargeable on the sale of Recharge Coupons. Acutally the coupons are purchase at a discount and sold to the retailers.
Thanks
Whether service tax is chargeable on the sale of Recharge Coupons. Acutally the coupons are purchase at a discount and sold to the retailers.
Thanks
Guest
Guest
(Expert)
16 October 2008
(My Opinion)Service tax is not applicable on sale of recharge coupons. service tax is always chareable on taxabale services (Prescribed in Service Tax Rules) so there is no service prescribed for sale of coupons of mobile so no liability of service tax
16 October 2008
Thanks a lot.
As the company who sells this coupons get a commission in the form of discount on sale of coupons. Whether the commission does not comes into any of the taxable service?
As the company who sells this coupons get a commission in the form of discount on sale of coupons. Whether the commission does not comes into any of the taxable service?
16 October 2008
It is sale and not service. There is s Apex court decision on this issue.
17 October 2008
I think the apex court decision was with respect to SIM cards and not on recharge coupons.
Service tax is applicable on recharge coupons as the sale is of the airtime and not of any other product. Furter, the practice of recharge coupons has come down, giving way to e-recharge with values being store and transferring through to buying parties through mobile.
mr.suraj when you are talking about discount i think you must be specifying the schemes which is being offered by the telecom companies as 10+2 or 10+3 which means for each 10 coupons value purchase 2 or 3 is being free to the distributor.
Service tax is applicable on recharge coupons as the sale is of the airtime and not of any other product. Furter, the practice of recharge coupons has come down, giving way to e-recharge with values being store and transferring through to buying parties through mobile.
mr.suraj when you are talking about discount i think you must be specifying the schemes which is being offered by the telecom companies as 10+2 or 10+3 which means for each 10 coupons value purchase 2 or 3 is being free to the distributor.
19 October 2008
Mr. Mohankrishnan can u give me personal id so that i can mail the complete details...
24 July 2025
Here’s a detailed overview regarding **Service Tax on Mobile Recharge Coupons** based on the discussion and prevailing laws around 2008:
---
### 1. **Is service tax applicable on sale of recharge coupons?**
* **No, the sale of physical recharge coupons itself is not a taxable service.**
Service tax is applicable only on *services* and not on the *sale of goods or physical coupons*.
* Recharge coupons are generally considered as **prepaid vouchers or goods** sold to distributors or retailers, so **no service tax on the sale transaction**.
---
### 2. **What about commission earned by the seller/distributor on sale of coupons?**
* The **commission or discount received by the distributor** (the difference between purchase price and selling price) may **not directly attract service tax** as such commission is part of the sale transaction of coupons, not a separate service.
* However, if the commission is for a **taxable service provided** (like marketing, distribution as a service), then service tax could apply.
* In telecom, **service tax is charged on ‘telecom services’ provided by telecom operators**, not on commission earned by distributors on sale of coupons.
---
### 3. **Is service tax applicable on recharge (airtime) itself?**
* Service tax is **applicable on the value of telecom services** provided by the telecom company (i.e., on airtime usage, data usage, calls).
* **Recharge coupons are a mode of payment/prepaid vouchers for telecom services**, not services themselves.
* So, the **telecom operator charges service tax on telecom services, not on coupons**.
---
### 4. **E-recharge and electronic mode**
* With the introduction of **electronic recharge or mobile wallets**, the issue of service tax on recharge might be different.
* Service tax applies on **electronic or digital services** if such services fall under taxable categories (e.g., online recharge portals charging a service fee).
---
### 5. **Legal rulings**
* Apex court rulings on **SIM card sales** do not automatically apply to recharge coupons.
* Recharge coupons are generally treated as **goods/vouchers** and **not taxable services**.
---
### **Summary Table**
| Activity | Service Tax Applicability |
| ---------------------------------------------------- | --------------------------------------------------------- |
| Sale of physical recharge coupons | No service tax (treated as sale of goods) |
| Commission/discount on coupons | Usually no service tax unless linked to a taxable service |
| Service provided by telecom operator (airtime usage) | Yes, service tax applicable on telecom services |
| Electronic recharge (service fee charged) | May attract service tax if it’s a taxable service |
---
If you want, I can help you draft a formal note or find any recent circulars for confirmation. Would you like that?
---
### 1. **Is service tax applicable on sale of recharge coupons?**
* **No, the sale of physical recharge coupons itself is not a taxable service.**
Service tax is applicable only on *services* and not on the *sale of goods or physical coupons*.
* Recharge coupons are generally considered as **prepaid vouchers or goods** sold to distributors or retailers, so **no service tax on the sale transaction**.
---
### 2. **What about commission earned by the seller/distributor on sale of coupons?**
* The **commission or discount received by the distributor** (the difference between purchase price and selling price) may **not directly attract service tax** as such commission is part of the sale transaction of coupons, not a separate service.
* However, if the commission is for a **taxable service provided** (like marketing, distribution as a service), then service tax could apply.
* In telecom, **service tax is charged on ‘telecom services’ provided by telecom operators**, not on commission earned by distributors on sale of coupons.
---
### 3. **Is service tax applicable on recharge (airtime) itself?**
* Service tax is **applicable on the value of telecom services** provided by the telecom company (i.e., on airtime usage, data usage, calls).
* **Recharge coupons are a mode of payment/prepaid vouchers for telecom services**, not services themselves.
* So, the **telecom operator charges service tax on telecom services, not on coupons**.
---
### 4. **E-recharge and electronic mode**
* With the introduction of **electronic recharge or mobile wallets**, the issue of service tax on recharge might be different.
* Service tax applies on **electronic or digital services** if such services fall under taxable categories (e.g., online recharge portals charging a service fee).
---
### 5. **Legal rulings**
* Apex court rulings on **SIM card sales** do not automatically apply to recharge coupons.
* Recharge coupons are generally treated as **goods/vouchers** and **not taxable services**.
---
### **Summary Table**
| Activity | Service Tax Applicability |
| ---------------------------------------------------- | --------------------------------------------------------- |
| Sale of physical recharge coupons | No service tax (treated as sale of goods) |
| Commission/discount on coupons | Usually no service tax unless linked to a taxable service |
| Service provided by telecom operator (airtime usage) | Yes, service tax applicable on telecom services |
| Electronic recharge (service fee charged) | May attract service tax if it’s a taxable service |
---
If you want, I can help you draft a formal note or find any recent circulars for confirmation. Would you like that?
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- ITR 3 VALIDATION
- Brokage income from sale and purchase of property
- Regarding Withdrawal of unused amount in Capital Gain account scheme
- LTCG EXEMPTION AND TAX APPLICABILITY
- ITR-4- U/s.44AD- Financial Particulars of Business
- Regarding Trading & Investment in Shares and MF in the context of Income tax return
- Correction in filed Form 27Q - showing error due to deductee contact number
- 44AD business and F&O loss
- Purchase of Time Deposit in AIS
- UNUTILISED CAPITAL GAIN FD
- Accounting entry for instalment payments and gst obigations
- "Please ensure that the Total of the Deductions u/s 54F match the same in Table D in Sch CG"
- Composition Dealer GST Annual Return Filing process
- Stamp Duty & Registration Fees on Sale Deed
- GST on Restaurant service
- Revision under Section 264 in The Income Tax Act, 1961
- TDS under section 195.
- Filing GST Returns after death of proprietor
- Registered Required in GST Act
- Switch over to Composition Scheme
Trending Online Classes
-
Input Tax Credit, GST refunds and Recovery of refunds- Roadblocks and way outs
CA Nipun Arora03 September 2025 -
GST LIVE Certification Course - 43rd Weekdays Batch(With Govt Certificate)
Industry Expert15 September 2025
CAclubindia
