Whether st applicable to dsa commission agent

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bhavin shah (Querist)
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28 January 2014 Dear Sir,

Whether ST applicable to DSA Commission agent of bank to arranging loan (Four Wheelers) to client.

My in 2013-14, Commission income is excedding rs. 10 lacs. (as DSA Commission agent of the various banks).

1). Whether ST applicable from 01.04.2014 onwards.....?

2). To whom, I has to charge service tax ..? (i.e. To Bank or To my Client...?)

3). If in year 2014-14 My Commission income will less than 10 lacs then, Whether ST applicable from 01.04.2015 onwards...?

Pls reply as soon as possible..
my email id : bhavin.cma@gmail.com

Thanks

CA Suresh Jain

CA Suresh Jain (Expert)
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29 January 2014
Hope you have started paying service tax as your turnover of taxable service is already exceeded Rs. 10 Lakh. (hope it was below 10 lakh in previous year i.e. 2012-13)

point -wise reply :-
1. yes, service tax shall be applicable w.e.f. 01.04.2014 from very first rupee;
2. Service tax is to be charged from the person to whom you are billing ;
3. as per present exemption notification, if value of taxable service remains below Rs. 10 lakh, you shall be eligible for exemption upto 10 lakh in year 2014-15

You may contact us for consultancy

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bhavin shah

bhavin shah (Querist)
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29 January 2014 Thanks Mr. N Jain for given reply to me.

But further i have to query on reply by you.

1). To Whom i have to raised bill with service tax amount(i.e. Total Bill including service tax)
...
a). TO Bank or b) To Client (for which i have to arrange four wheeler loan)....?

Because i have dsa agent of bank and i have give service to both bank and our client.

2). In Which Service Tax Registration required .... (Regular or Business Auxiliary)

3) In Point - 3, My query is as below mentioned.

i). If in year 2013-14, My Commission Income exceed of Rs. 10 Lacs. So, I have to pay service tax from 01-04-2014 for 2014-15 year of Commission Income. But in 2014-15 My Commission Income is not exceed of Rs. 10 lacs. Then, Can i continuous charged service tax from 01.04.2015 (for the year 2015-16 Commission Income).....?

Sure sir, if my income exceed rs. 10 lacs then i have contact to u for registration and further service tax services.

Thanks,

CA Suresh Jain

CA Suresh Jain (Expert)
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30 January 2014 1. To whom to bill depends on who appointed you and who pays you.
2. DSA are agents of bank facilitating bank - it will be a business auxiliary service
3. if your taxable income exceeds 10 lakh in 2013-14,
a. you have to pay service tax on the amount exceeding 10 lakh in 2013-14
b. you have to pay service tax in 2014-15 on all billing even if amount of taxable service does not exceed 10 llakh
c. if aggregate amount of all taxable services remains below 10 lakh i 2014-15, as per present law, you shall not be eligible for exemption up to 10 lakh

bhavin shah

bhavin shah (Querist)
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30 January 2014 Thank Sir.

Further query on reply...

1). I seen in market that most of all DSA Commission Agent of Bank has never issue any invoice to bank.
and never charged service tax on it.

Pls. clarify

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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03 August 2025 Here’s the detailed clarity on Service Tax applicability for DSA (Direct Selling Agents) commission agents of banks arranging four-wheeler loans:

1. Is Service Tax applicable to DSA commission income?
Yes, service tax is applicable on commission income earned by DSA from banks.

Effective from 01.04.2014, there is no exemption limit; service tax is payable from the very first rupee.

Prior to 01.04.2014, exemption was available if aggregate taxable service turnover was below Rs. 10 lakh.

2. To whom should you charge service tax? Bank or client?
You charge service tax on the commission you earn from the entity that pays you.

Usually, DSA’s principal is the bank.

Hence, you raise invoice including service tax to the bank (not the client/borrower).

The bank is the recipient of your “business auxiliary service” (service rendered to the bank).

3. Which service category covers your activity?
DSA commission income is covered under Business Auxiliary Service.

You should get registered under this category.

4. What if commission income fluctuates across financial years?
If your commission income exceeded Rs. 10 lakh in 2013-14, you were liable to register and pay service tax from that year onward.

For the year 2014-15, service tax is payable even if your commission income falls below Rs. 10 lakh, because the exemption was withdrawn from 01.04.2014.

If your income falls below Rs. 10 lakh in subsequent years, you still need to pay service tax and comply with registration, as exemption no longer applies to DSA services.

5. About non-issuance of invoices and non-charging of service tax by DSAs
Many DSAs do not issue invoices or charge service tax, but this does not mean they are not liable.

Non-compliance may invite penalties and interest from tax authorities.

Proper invoices showing service tax and timely payment are mandatory for legal compliance.

Summary Table
Question Answer
Is service tax applicable on DSA commission? Yes, under Business Auxiliary Service from 01.04.2014
To whom charge service tax? To the Bank (principal) who pays the commission
Registration needed? Yes, under Business Auxiliary Service
What if commission income drops below 10 lakh? Still liable to pay service tax; exemption withdrawn since 01.04.2014
Is issuing invoice and charging tax mandatory? Yes, legally mandatory; non-compliance risky

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