TDS deductn from Ocn Frt & Service tax

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shruti (Querist)
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19 December 2007 xyz is forwarding co. xyz's shpr is again a forwarder or sometimes direct shpr. when he raises invoice on this shpr or forwarder, that invoice includes ocean freight, thc applicable and documentation charges charged by the s/line. while making payment shpr or forwarder deducts 2.27% tds from the gross amount and gives the payment. 1) is it correct? 2) is this xyz comes under service tax bracket? its business is only adding profit margin in the ocn frt charged by the shipping line and quoting the same to the shpr or forwarder. pl guide.

CA. Vineet Grover

CA. Vineet Grover (Expert)
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19 December 2007 hi shruti,

there is a very minute difference between an allowance and re-imbursement. If margin of profit is included in any services, the same is an allowance but if there is no margin of profit, the same is a re-imbursement. Thus deduction of TDS is correct.

Under the present scenario, xyz 's nature of business is service and hence service tax is applicable. But xyz can claim service tax input against the service tax to be deposited with the department.

Rgds/

Vineet

shruti

shruti (Querist)
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19 December 2007 hi vineet,

thank you very much for ur prompt reply.

but xyz is forwarder. it only add profit margin on the ocean freight gvn by the s/line and quotes the same to the shpr.
how's it can be termed as a service ? plsss explain.
also he doesnt get any sort of commission from the shipping line. neither he provides any kind of service to anybdy.

pl adv.

CA Sanat Pyne

CA Sanat Pyne (Expert)
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24 July 2010 agree with vineet

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