Life insurance commission agency service

This query is : Resolved

Sawan Gokani (Querist)
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28 November 2012 Hi All,
My query is
1. "Can an individual life insurance agent avail exemption from service tax on his commission income upto Rs. 10 lakh?"
2. "If service tax has been deducted from his commission can he claim refund of the same from the department?"
Thanking you in advance.

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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28 November 2012 In respect of services rendered by an insurance agent, service tax is payable by the insurance company. The agent is NOT liable to pay service tax.

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Sawan Gokani

Sawan Gokani (Querist)
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28 November 2012 That is true but his commission gets reduced by the amount of service tax. Can't he avail the exemption upto the first Rs. 10 lakh of his commission income?

CA Siddhartha Bhardwaj

CA Siddhartha Bhardwaj (Expert)
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28 November 2012 You mean to say that the insurance company is recovering the service tax amount from the agent?

The reduction must be of TDS.

Sawan Gokani

Sawan Gokani (Querist)
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28 November 2012 Yes the company is deducting service tax as well as tds from commission.

Viral Vora

Viral Vora (Expert)
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28 November 2012 Insurance Services are under reverse charge mechanism.

It is to be noted that no basic exemption limit is allowed under services following under reverse charge mechanism.

Besides it is service receivers duty to pay service tax upto 100% under insurance services.

Hence 1. Your agent cannot avail basic exemption limit

2. You cannot claim refund

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