Service tax on sub broker
This query is : Resolved
02 August 2011
PLEASE TELL ME THAT
1. SUB BROKERS ARE LIABLE TO SERVICE TAX FOR THE BROKERAGE CHARGED FROM THE CLIENTS ON THE BEHALF OF WHOM THEY DEAL WITH MAIN BROKER OR SECURITIES EXCHANGE.
2. IF SUCH BROKER IS INDIVIDUAL THEN WHAT IS THE DUE DATE TO PAY SERVICE TAX AND TO FILE THE REFUND.
3. IF SOME SERVICE PROVIDER OMITS TO CLAIM THE CENVAT CREDIT FOR THE SERVICE TAX PAID ON THE INPUT SERVICES IN ONE QUARTER,THEN CAN HE CLAIM THE SAME CREDIT ,WHICH IS OMITTED,IN THE NEXT QUARTER?
4. CAN THE SUB BROKER TAKES THE CREDIT FOR SERVICE TAX PAID ON ALL THE INPUT SERVICES(e.g. telephone services,consultancy services and other) OR HE CAN CLAIM ONLY ON THE INPUT S.TAX PAID TO MAIN BROKER ONLY
QUICK REPLY IS APPRECIATED.
THANKS IN ADVANCE.
1. SUB BROKERS ARE LIABLE TO SERVICE TAX FOR THE BROKERAGE CHARGED FROM THE CLIENTS ON THE BEHALF OF WHOM THEY DEAL WITH MAIN BROKER OR SECURITIES EXCHANGE.
2. IF SUCH BROKER IS INDIVIDUAL THEN WHAT IS THE DUE DATE TO PAY SERVICE TAX AND TO FILE THE REFUND.
3. IF SOME SERVICE PROVIDER OMITS TO CLAIM THE CENVAT CREDIT FOR THE SERVICE TAX PAID ON THE INPUT SERVICES IN ONE QUARTER,THEN CAN HE CLAIM THE SAME CREDIT ,WHICH IS OMITTED,IN THE NEXT QUARTER?
4. CAN THE SUB BROKER TAKES THE CREDIT FOR SERVICE TAX PAID ON ALL THE INPUT SERVICES(e.g. telephone services,consultancy services and other) OR HE CAN CLAIM ONLY ON THE INPUT S.TAX PAID TO MAIN BROKER ONLY
QUICK REPLY IS APPRECIATED.
THANKS IN ADVANCE.
02 August 2011
Exemption to services provided by sub-broker: Sub- brokers are not
liable to service tax under ‘stock broker’s service’ w. e. f. 01.09.2009.
(Notification No. 31/2009-ST dated 01.09.2009)
liable to service tax under ‘stock broker’s service’ w. e. f. 01.09.2009.
(Notification No. 31/2009-ST dated 01.09.2009)
02 August 2011
THEY ARE NOT LIABLE TO SERVICE TAX FOR THE SERVICES RENDERED TO STOCK BROKER. BUT ARE HOWEVER LIABLE TO SERVICE TAX ON BROKERAGE CHARGED FOR THE SERVICES RENDERED TO THEIR CLIENTS.
IN THIS CASE WHAT TO DO WITH ABOVE QUIRES .
IN THIS CASE WHAT TO DO WITH ABOVE QUIRES .
24 July 2025
Let's break down your queries on **service tax for sub-brokers** clearly:
---
### 1. **Are sub-brokers liable to service tax on brokerage charged from clients?**
* **Yes**, sub-brokers are **liable to pay service tax** on the brokerage or commission they charge to their clients.
* However, services provided **by sub-brokers to the main stock broker** (like commission paid by the broker to sub-broker for their services) are **exempt** under Notification No. 31/2009-ST dated 01.09.2009.
* So, sub-brokers do **not pay service tax on amounts received from the main broker**, but **do pay service tax on brokerage collected directly from clients**.
---
### 2. **If the sub-broker is an individual, what is the due date for payment of service tax and filing the return?**
* **Due date for payment of service tax:**
Service tax must be paid **monthly** by the 6th day of the following month (i.e., service tax for July must be paid by 6th August).
* **Return filing:**
Service tax returns (ST-3) must be filed **quarterly**, generally by the 25th of the month following the quarter.
For example, for Q1 (April-June), the return is due by 25th July.
---
### 3. **If a service provider omits to claim CENVAT credit in one quarter, can it be claimed in the next quarter?**
* **Yes**, CENVAT credit that was not claimed in a previous quarter **can be claimed in subsequent quarters**.
* However, the credit must be claimed within the prescribed time limit (usually within **one year** from the date of invoice or payment, whichever is later).
* It is advisable to keep proper records to support the claim.
---
### 4. **Can the sub-broker claim CENVAT credit on all input services or only on the service tax paid to the main broker?**
* The sub-broker can claim CENVAT credit on **all eligible input services** used for their taxable service, such as:
* Telephone services
* Consultancy services
* Other input services
* They are **not limited to claiming credit only on the service tax paid to the main broker**.
* Claiming credit is subject to the usual rules and restrictions under the CENVAT Credit Rules.
---
### Summary:
| Question | Answer |
| ----------------------------------- | -------------------------------------------------------------- |
| Liability on brokerage from clients | Yes, sub-broker pays service tax on client brokerage |
| Due dates for payment & filing | Payment monthly by 6th; Return quarterly by 25th of next month |
| CENVAT credit omitted? | Can be claimed later within prescribed time |
| Input services credit | Claimable on all eligible inputs, not limited to main broker |
---
If you want, I can help draft payment schedules, or assist with CENVAT credit procedures or return filing formats for your sub-broker business. Would you like that?
---
### 1. **Are sub-brokers liable to service tax on brokerage charged from clients?**
* **Yes**, sub-brokers are **liable to pay service tax** on the brokerage or commission they charge to their clients.
* However, services provided **by sub-brokers to the main stock broker** (like commission paid by the broker to sub-broker for their services) are **exempt** under Notification No. 31/2009-ST dated 01.09.2009.
* So, sub-brokers do **not pay service tax on amounts received from the main broker**, but **do pay service tax on brokerage collected directly from clients**.
---
### 2. **If the sub-broker is an individual, what is the due date for payment of service tax and filing the return?**
* **Due date for payment of service tax:**
Service tax must be paid **monthly** by the 6th day of the following month (i.e., service tax for July must be paid by 6th August).
* **Return filing:**
Service tax returns (ST-3) must be filed **quarterly**, generally by the 25th of the month following the quarter.
For example, for Q1 (April-June), the return is due by 25th July.
---
### 3. **If a service provider omits to claim CENVAT credit in one quarter, can it be claimed in the next quarter?**
* **Yes**, CENVAT credit that was not claimed in a previous quarter **can be claimed in subsequent quarters**.
* However, the credit must be claimed within the prescribed time limit (usually within **one year** from the date of invoice or payment, whichever is later).
* It is advisable to keep proper records to support the claim.
---
### 4. **Can the sub-broker claim CENVAT credit on all input services or only on the service tax paid to the main broker?**
* The sub-broker can claim CENVAT credit on **all eligible input services** used for their taxable service, such as:
* Telephone services
* Consultancy services
* Other input services
* They are **not limited to claiming credit only on the service tax paid to the main broker**.
* Claiming credit is subject to the usual rules and restrictions under the CENVAT Credit Rules.
---
### Summary:
| Question | Answer |
| ----------------------------------- | -------------------------------------------------------------- |
| Liability on brokerage from clients | Yes, sub-broker pays service tax on client brokerage |
| Due dates for payment & filing | Payment monthly by 6th; Return quarterly by 25th of next month |
| CENVAT credit omitted? | Can be claimed later within prescribed time |
| Input services credit | Claimable on all eligible inputs, not limited to main broker |
---
If you want, I can help draft payment schedules, or assist with CENVAT credit procedures or return filing formats for your sub-broker business. Would you like that?
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