Dear Members,
I need your immediate help as same is required for my business survival, we are private tutoring agency who provides private tuition to individual in Delhi/NCR region, as we are nearing 9 Lakh so we need to go for Service Tax number.
In our business model we charge 10% from tutors and pass rest of 90% payment to them. In this 10% of consultancy charge we take feedback from family, provide coordination help between tutor and family and give backup teachers as and when required.
For Example :-
Fees is Rs. 3,000 per month so we keep 300(10%) per month and pass Rs. 2,700(90%) to Tutor.
Although we charge 10% only as consultancy charge still many family and tutor cheat us and they connect directly but thats fine we consider that as part of our business model.
Now when we will start charging service tax, our tuition fees will become Rs. 3,000+ service tax i.e. Rs. 370 now fees will become Rs. 3,370 but tutor will still get Rs. 2,700 so there is difference of Rs. 670, in this case difference between what family is paying to us and what we are paying to tutor is nearly 25%.
With this difference family will stop taking classes from us as they dont want to pay service tax and even if they are willing to pay tutors wont accept difference of 25% either they will move to some other agencies(who are not paying any taxes) or they will contact families directly.
Please let us know whether we need to charge services tax on our commission or entire fees, if its on entire fees we wont be able to survive but if it is on our consultancy charge then it will be fine.
Kindly guide us on same urgently as same is required for our business survival.
Regards,
Amit
CAclubindia
