27 March 2010
we have taken a franchisee of a pre school in bangalore and started collecting fees in the name of the franchisor and in turn they deduct their percentage of 10% and return the amount to us. Does this process attract any service charge to the franchisor or franchisee. pls suggest me whether the fees should be collected in the name of the franchisee or franchisor and service tax applicable in this process
08 April 2010
Pre School Coaching is exempted from service tax as per the definition of coaching classes u/s. 65(27) of Finance Act, 1994 but However the services of Franchise is liable to service tax under Franchise Services sec. 65(105)(zze) w.e.f. 16-6.05. in my opinion the Franchise services will be taxable in the hand of Franchisor.
CAclubindia
