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TMI BlogService tax on referral fees / commissionX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Experts, A manufacturing company has given reference of some of its customers who was in need of working capital to Bank. For providing such reference of prospective customers by company, the bank has given some amount of money as reward / referral fee / commission (whatever it can be called as) to the company. Now the query is whether service tax is applicable on such reward / referral fee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... / commission received by the Bank. In my view, the company being manufacturer has not promoted or marketed about the Banks loan facility to the customers. A company has merely referred the details of prospective customers to the Bank and Bank has provided loan to those customers and a reward is credited to the company. In my view this does fall under Business Auxiliary Service and therefore no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service tax is warranted. Request the experts to share their valuable views in this regard. Thanks. - Reply By Ganeshan Kalyani - The Reply = Sir Apologise. Please read as 'received by the company' in the last sentence of the first para. And read as 'does not fall under business auxiliary service' in last sentence of second para. Sorry for the mistake. - Reply By surya nar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayana - The Reply = Dear Kalyani Garu, First of all, one has to come to conclusion whether the ingredients to qualify for service are present in the transaction. If , the answer is yes then to check for taxability and exemption if, any available and to proceed accordingly. Best Regards Suryanarayana - Reply By KASTURI SETHI - The Reply = Sh.Ganeshan Kalyani Ji, A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... greed with Sh.Surya Narayana, Sir. Regarding the ingredients/parameters : 1. There must be service provider. 2. There must be service receiver. 3. There must be consideration. You may say reward or incentive or commission. It is consideration and it has boosted the bank business by way of reference. It will fall under the category of intermediary service ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /BAS. This is my view. - Reply By Ganeshan Kalyani - The Reply = Sir, Thanks for your valuable advise. - Reply By Rajagopalan Ranganathan - The Reply = Sir, According to Section 65 B (44) of Finance Act 1994 ,- service means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include- (a) an act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ivity which constitutes merely,-- (i) a transfer of title in goods or immovable property, by way of sale, gift or in any other manner; or (ii) such transfer, delivery or supply of any goods which is deemed to be a sale within the meaning of clause (29A) of Article 366 of the Constitution ; or (iii) a transaction in money or actionable claim; (b) a provision of service by an employ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee to the employer in the course of or in relation to his employment; (c) fees taken in any Court or tribunal established under any law for the time being in force. Therefore in your case the definition of service, that is, service means any activity carried out by a person for another for consideration is fully satified. Therefore you are liable to pay service tax on the commission earned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by you. However if the commission earned is less than ₹ 10 lakhs during previous financial year or does not likely to exceed ₹ 10 lakhs during current financial year thenyou need not pay any service tax. Till you reach ₹ 9 lakhs limit you nedd not take registeration under Section 69 of Finance Act, 1994 read with Service Tax Rules, 1994 . - Reply By Ganeshan Kalyani - The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Reply = Sir thanks for your opinion. Thanks. - Service tax on referral fees / commission - Query Started By: - Ganeshan Kalyani Dated:- 27-4-2016 Service Tax - Got 6 Replies - Service Tax - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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