tax on commission
This query is : Resolved
08 August 2016
sir, I just want to ask is service tax applicable on Adat(commission) on sale of agriculture goods to purchaser (from farmers to purchaser) and if applicable then what will be the rate.
09 August 2016
it is exemted from tax
Message likes :
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09 August 2016
thank you so much madam... but can you please help me with section in which it is covered
26 July 2025
Great question — and yes, there **was an exemption from service tax** on commission (Adat) for sale of agricultural produce **prior to GST**, and it was backed by a **clear legal provision**.
---
## ✅ **Legal Position under Service Tax (pre-GST era)**
### 🔹 **Notification No. 25/2012 - Service Tax**, dated 20th June 2012
This is the **Mega Exemption Notification**.
---
### 📜 Relevant Entry: **Entry No. 20 (later 30)**
> **“Services by a commission agent for sale or purchase of agricultural produce are exempt.”**
So, **Adat services (commission) for sale of agricultural goods** from **farmer to purchaser** were **exempt from service tax**.
---
## 💬 Definition of "Agricultural Produce" (as per Service Tax)
> Agricultural produce means any produce of agriculture **on which either no further processing is done or such processing is done by the cultivator or producer which does not alter its essential characteristics**.
So, items like **grains, pulses, fruits, vegetables** qualify — but **processed or branded food items** may not.
---
## ✅ Summary
| Item | Applicability of Service Tax |
| -------------------------------------- | ---------------------------------------------------------------- |
| Commission on raw agricultural produce | ❌ **Exempt** under Notification 25/2012 |
| Processed/branded items | ✅ May be **taxable** if not qualifying as "agricultural produce" |
---
## 📌 Section / Notification to Refer:
* **Notification No. 25/2012-ST** (Mega Exemption Notification)
* Entry No. 20 (renumbered to Entry 30 later)
---
If you need the **exact wording of the notification** or a **declaration format** for exemption, I can provide that too. Just let me know.
---
## ✅ **Legal Position under Service Tax (pre-GST era)**
### 🔹 **Notification No. 25/2012 - Service Tax**, dated 20th June 2012
This is the **Mega Exemption Notification**.
---
### 📜 Relevant Entry: **Entry No. 20 (later 30)**
> **“Services by a commission agent for sale or purchase of agricultural produce are exempt.”**
So, **Adat services (commission) for sale of agricultural goods** from **farmer to purchaser** were **exempt from service tax**.
---
## 💬 Definition of "Agricultural Produce" (as per Service Tax)
> Agricultural produce means any produce of agriculture **on which either no further processing is done or such processing is done by the cultivator or producer which does not alter its essential characteristics**.
So, items like **grains, pulses, fruits, vegetables** qualify — but **processed or branded food items** may not.
---
## ✅ Summary
| Item | Applicability of Service Tax |
| -------------------------------------- | ---------------------------------------------------------------- |
| Commission on raw agricultural produce | ❌ **Exempt** under Notification 25/2012 |
| Processed/branded items | ✅ May be **taxable** if not qualifying as "agricultural produce" |
---
## 📌 Section / Notification to Refer:
* **Notification No. 25/2012-ST** (Mega Exemption Notification)
* Entry No. 20 (renumbered to Entry 30 later)
---
If you need the **exact wording of the notification** or a **declaration format** for exemption, I can provide that too. Just let me know.
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