On Advt. Agency -tax would be charged on net off commission ?

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I have little confusion on service tax to be applicable on advertising agency. In general Service tax is applicable @ 12.36% on 15% commission. But friends I would like to know the treatment of tax where the agency pass on certain discount to it's client and there is proof of evidence of such discount in the invoice raised by the agency. Suppose the agency pass on 9% discount and reflects it in the invoice. In such case whether service tax would be on 6% net off discount ( 15%-9%) ? or it would as usual @ 12.36% on 15% .

Can some one refer me any notification or case study in this regard.

Replies (5)

 

Hi,
It's on the net amount charged, like in your case it should be on 9 %.
Apart from the Service tax if you are a user , pl. ask for total 15 % commission pass over…………as in the industry even big player are passing 15 % commission.
If you are Advertisement agent ……………enjoy 6 % profit.
 
 
Regards
CA Sanjiv Dhingra

Sorry it should be on 6 %.........

I have little confusion on service tax to be applicable on advertising agency. In general Service tax is applicable @ 12.36% on 15% commission. But friends I would like to know the treatment of tax where the agency pass on certain discount to it's client and there is proof of evidence of such discount in the invoice raised by the agency. Suppose the agency pass on 9% discount and reflects it in the invoice. In such case whether service tax would be on 6% net off discount ( 15%-9%) ? or it would as usual @ 12.36% on 15% .Pls refer me any case studies or reference

Can some one refer me any notification or case study in this regard.

You should pay service tax on the 15% commission, because that is your taxable income and you should discharge your tax liability.  Passing on some commission - for business reasons - is seperate transaction and not related to your taxable income. 

Assuming you pass on 15% discount, does it mean you need not pay any service tax?

Originally posted by :Prodip Das
"  

I have little confusion on service tax to be applicable on advertising agency. In general Service tax is applicable @ 12.36% on 15% commission. But friends I would like to know the treatment of tax where the agency pass on certain discount to it's client and there is proof of evidence of such discount in the invoice raised by the agency. Suppose the agency pass on 9% discount and reflects it in the invoice. In such case whether service tax would be on 6% net off discount ( 15%-9%) ? or it would as usual @ 12.36% on 15% .
Actually Publication bill is                              100,000/-

Commission @ 15%                                         15,000/-

                                                                        ------------        

And after Agency commission                         85,000/-

                                                                        =======

And I billed for Client                                    110,000/-

Commission @ 15%                                         10,000/-

                                                                        ------------

Total Taxable  Amt                                          99,000/-

And tax on taxable amt (99000 @ 15%

Rs. 14850/-on that Service Tax @ 12.36%       1835.46

                                                                        ========

Total Amt                                                       100835.46

 which right or is there any clarification
Can some one refer me any notification or case study in this regard.

"

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