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Whether Director Commission is liable for service Tax?

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Commission  paid to a Director by the company   @ 5% of Net Profits :  Whether it is liable for Service Tax under Business Aux. Services.

Replies (4)

 

The Section 65(19) of the Finance Act, 1994 has given very wide definition of the term "Busi Aux Service" (BAS). As per the clear reading of the definition, the Commission paid to the Directors does not attract Service-tax.

The Commission paid to Directors is in the nature of incentive to boose the sales of the Company. It is not the Commission per se. The purpose of such commission is to link their performance with company's result. Secondly, the Directors are not Commission Agent and hence incentives (or commission) paid to them would not attaract Service-tax.

Of late, Exise Dept started asking queires in this direction but is not standing on strong legal footings. In order to avoid this, many Companies use the word "Incentives" instead of "Commission".

 

Aminities received apart from the Rent for commercial letout is attract the service tax may please be clarified.

Amenities received should also be included and tax paid.

Dear Friend

You can also check the Circular No 115/09/2009 - ST of Department of Revenue Central Board of Excise and Customs circular  which is attached herewith.

 

 


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