•Is service tax paid by sharetrader(business) deductible?

This query is : Resolved

Narendra Shah (Querist)
Follow

14 November 2010 we are trading in shares and derivatives and we pay service tax on every bill from broker. Now question is ---- Is this tax paid by trader is expence while calculating profit or loss on securities/shares/ derivatives? Is this tax payment is cost to the purchase/direct cost like any other commodities/or services cost?
It cost like rates and taxes?

Or it is not addition of cost? and it is not deductible like STT(security transaction tax)?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

14 November 2010 Service Tax is Deductible Expense which is levied on brokerage paid by you. The similar treatment as you are making for brokerage will be applicable for Service Tax also.

STT paid by a trader in shares is also a deductible expense.

Message likes : 1 times

Narendra Shah

Narendra Shah (Querist)
Follow

14 November 2010 Paras Bafna
Thank you. I would appriciate
If you tell me IT U/s no. or any other rules or court ruling about both service tax and STT.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
Follow

14 November 2010 SECURITIES TRANSACTION TAX -
Please refer Section 36(1)(xv)
Deductible from AY 2009-10 & onwards
SERVICE TAX- SECTION 37(1)
It is a normal business expenditure incurred exclusively for the purpose of business.
We pay service Tax in telephone bills or for other services and getting deduction. Likewise service tax on Brokerage is nothing but part of brokerage and as such deductible.

Message likes : 1 times

Narendra Shah

Narendra Shah (Querist)
Follow

14 November 2010 Thank you very much .

Narendra Shah

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now