SERVICE TAX ON BROKERAGE FROM SHIPPING AGENT
This query is : Resolved
25 February 2008
We are a C.H.A. (Custom House Agent). For export consignments of our client, we are receiving 2% brokerage on shipping freight amt. from shipping line.
Is this brokerage taxable ?? If yes, under which category ?? Pls note 1) Not all shipping co giving this brokerage 2) Out of freight on which amt, brokerage @ 2% will be paid is not decided, 3) When we will receive brokerage thats also not decided, it may be after 2-3 months, 6 months. 4) Shipping co are foreign co and brokerage charged by us and granted by co. is in US$ but recd in INR by converting at respective Ex Rate
I found on Marwah & Associates website servicetax.com that this amt is not taxable (the amt recd by CHA from shipping line for canvassing of Import/Export Cargo would not be chargeble to service tax as these activitiy do not fall within an ambit of taxable services provided by C.H.A.
but department says that this is taxable.
SO, PLEASE HELP.
Is this brokerage taxable ?? If yes, under which category ?? Pls note 1) Not all shipping co giving this brokerage 2) Out of freight on which amt, brokerage @ 2% will be paid is not decided, 3) When we will receive brokerage thats also not decided, it may be after 2-3 months, 6 months. 4) Shipping co are foreign co and brokerage charged by us and granted by co. is in US$ but recd in INR by converting at respective Ex Rate
I found on Marwah & Associates website servicetax.com that this amt is not taxable (the amt recd by CHA from shipping line for canvassing of Import/Export Cargo would not be chargeble to service tax as these activitiy do not fall within an ambit of taxable services provided by C.H.A.
but department says that this is taxable.
SO, PLEASE HELP.
29 February 2008
The Board has through Circular No.715 dated August 8,1995 clarified that since Section 194J refers to "any sum paid", reimbursement of actual expenses cannot be deducted from the bill and that such reimbursement will also have to be taken into account in deducting tax at source.
However, the issue of whether tax deduction will be attracted where such expenses are claimed through a separate statement stands unclarified by the Board
It is felt that (In my opinion)probably if the expenses are claimed through a separate statement there will be no requirement to deduct tax at source, provided the deductor is satisfied that the expenses claimed as reimbursement are only the actual expenses incurred. If there is an element of profit, that is to say that if the reimbursement is not of actual expenses, tax will have to be deducted at source even if the expenses are claimed through a separate statement. This has to be tested.
However, the issue of whether tax deduction will be attracted where such expenses are claimed through a separate statement stands unclarified by the Board
It is felt that (In my opinion)probably if the expenses are claimed through a separate statement there will be no requirement to deduct tax at source, provided the deductor is satisfied that the expenses claimed as reimbursement are only the actual expenses incurred. If there is an element of profit, that is to say that if the reimbursement is not of actual expenses, tax will have to be deducted at source even if the expenses are claimed through a separate statement. This has to be tested.
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03 March 2008
SRINIVAS JI.......U HAVE ANSWERED HERE A SOLUTION OF MY I.T. PROBLEM BUT PLEASE READ THIS QUERY IS PERTAINED TO SERVICE TAX MATTER.
28 March 2008
The custom house agent incurs various expenses like bank collection charges, courier charges, and miscellaneous charges on account of the exporter and such expenses are reimbursed from the client and are not included in the value of taxable service. The client also charges the client for his services which can be named as agency commission or brokerage or any similar kind of heads. The payment received by the CHA from shipping lines for canvassing of import/export cargo would not be chargeable to service tax. but the service tax is to be computed on the gross service charges like agency commission or brokerage. The service tax has to be computed on such service charges. In other words the payments made by CHA on behalf of the client towards statutory levies and the reimbursable expenses will not be liable to tax
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