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Service tax on commission on sale of branded goods

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Ghanshyam Fogla

14 Points Posted on 04 August 2016

Hello Friends,

I am selling garments under the brand name of other person and I earn commission income out of it. The VAT compliance is done by the brand owner itself i.e. the company. Billing and all the formalities are done under the name of company only. We run as a franchisee.

The taxable turnover of commission in a year is below 10,00,000. I want to know whether I fall under the SSP(Small Service Provider) for claiming no service tax on first 10,00,000 as there is an exception that the use of brand name of other person are not eligible for SSP.

Thanks

Replies (1)

Shreesh Kumar

CA Final

122 Points Posted on 04 August 2016

Dear Ghanshyam,

No Exemption of SSP is allowed when Services are provided under brand name or trade name of others.

Since your income is in the nature of Commission and you are not selling services under any brand name of others. You are just getting commission from selling of goods on behalf of your principal company and getting Commission in consideration of services provided by you. Therefore you can claim exemption of being SSP.

As far the taxability of service tax is concerned following chart can help you in understanding:

Taxable Services provided
Preceding Financial Year	Current Financial year	Service Tax applicable
Less than 10 lakhs	Less than 10 lakhs	No Service Tax
Less than 10 lakhs	More than 10 lakhs	Service is taxable after 10 lakhs
More than 10 lakhs	Less than 10 lakhs	Service is taxable from begining (No exemption)