Service Tax

Dear Smitha

I think the amouts received by you may be inclusive of Service Tax as per your contracts with them (i.e Rs. 91+ Rs. 9 = Rs. 100). However as per the rule 4A of Service Tax Rules, 1994  an invoice / bill/ any other document should be raised for charging / collecting Service Tax from your customer. Without this procedure you should not collect any Service Tax from your customer.

If you follow the above rule your problem will be resolved automatically.

Ask from service receiver as to how billing and payment is done. I feel there is some mistake.

Dear Mr. Rajesh,

Thnx for ur reply. Actually in the brokerage note which i receive from the Asset Management Cos(AMC) like Reliance, ICICI Prudential, HDFC etc.. they mentioned the bifurcation of gross brokerage, Service tax on the same and the net brokerage but the amt which i receive is the gross brokerage only. I ask the Relationship managers but they are saying this is the method which all AMCs are following. i simply dont understand how to make entries and how to take the cenvat credit.

Kindly advice if u have any clue for the same.

Regards,Smita

In general, service tax is payable by service provider. However, liability to pay service tax can be shifted on some other person as provided in Section 68(2) of the Finance Act.

In case of distribution of mutual fund by distributor or agent, such liability has been shifted on the service receiver, that is mutual fund company, vide notification 36/2004 dated 31.12.2004. In view of this the process adopted appears reasonable.

You should not be charging service tax on the bills as they will assess and pay, and take credit to be utilised in payment of service tax for Asset management service.

Dear Sir,

i am really thankful for the explaination. it is very much clear that why the AMCs are not including service tax while making payment to us. but the service tax which i pay to my service providers cant be utilised. I dont understand how to take credit / set off of those service tax.

Please give me your valueable opinion. Thanks  & regards,

Smita

You can avail credit of service tax only when you are providing some output service on which you are required to pay duty. In the present circumstances, you are not paying any service tax, so you cant avail any credit of service tax.