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Service tax on commission

DEEPAK ROHERA (Senior Accountant) (285 Points)

05 October 2016

we are providing housing finance as associates of Banks and NBFC's and we received commission from banks and nbfc's upto 9-10 lac per year shall we liable for service tax if yes than which categoery, what is the process of registration, are we registere our firm now or after GST.

thanks in advance

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2 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 05 October 2016

1. Yes, you are liable to charge & pay service tax under Business Auxilary Services.

Read: Malabar Management Services Pvt. Ltd. v CST, Chennai 2007-TIOL-1949- CESTAT-MAD : 2008 (9) STR 483 (Tri. Chennai) – In the instant case, the appellant was engaged in marketing of ICICI bank's loan products through tele-marketing or contacting prospective customers as well as processing documentation and evaluating the customer and forwarding application to the banks. The bank was paying service charges on monthly basis for the same. The tribunal held that such activities rendered by the appellant to the ICICI bank are covered under the business auxiliary services.

2. For current financial year, whenever your commission receipt exceeds 9 lakhs Rs., you are required to get registered with Central Excise & service tax department. And charge collecting service tax @ 15% from every rupee above rs. 10L.

3. Well, you may get exempted under GST, as the limit there would be 20 lakhs.

CA Ashish Garg (Chartered Accountant) (545 Points)
Replied 05 October 2016

Since, the value of service is upto Rs. 10 lakhs you need not charge service tax on provision of such services. However, if the value of service exceeds Rs. 10 lakhs then you shall be liable to pay service tax.