Pure agent

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Querist : Anonymous

Querist : Anonymous (Querist)

17 February 2017 I am doing audit of pvt limited company who is engaged in the business of travel agency.My query is "company incurred Visa fees and paid to the respective consulate but company is receiving much higher amount from its client and paid service tax on the receiving amount.
For example actual visa fees is 2800 but it is receiving 3500 from its clients.Company remit 2800 to the consulate and retained 700(3500-2800).So service on which amount 3500 or 2800? my first question
Is it not a case of pure agent??
If not then Service tax should be on 3500 ,according to my view.
But i am confused by seeing the company's accounting.
Here is the company accouning:
Xyz (client)A/c DR 3500
Visa processing Dr 2800
To Consulate 2800 CR 2800
Visa processing fees CR 3409
Service tax on visa processing Cr 91
But according to me this is quite wrong.Help me to find out right accounting.ASAP

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

17 February 2017 It is not a case of pure agent in view of higher amount collected than payable to Consulate. Service tax only applicable on service provided of Rs. 700 including service tax. Company's accounting is ok.

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2017 so sir service tax output is RS 91 for the company,Sir what about the service tax which is levied by consulate in his bill of Rs 2800?

Querist : Anonymous

Querist : Anonymous (Querist)

18 February 2017 Sir is it possible if company charge from client exclusive of service tax and company paid to consulate the whole amount inclusive of service tax ,then company can claim service tax input (which is borne by company while paying to Consulate)

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

18 February 2017 No service tax applicable on visa fees paid to Consulate.

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