Service tax on commission received from general insurance co

Dear all,

 

The Problem is, an automobile dealer entered into agreement with General Insurance Company for providing agency service to General insurance company. As per the finance act 1994, insurance company (service receiver) is liable to pay service tax under reverse charge mechanism. But as per terms of agreement, the liability of service tax should be borne by Dealer i.e., service provider. My question is, can that terms of agreement override the provision of Act? (i.e., service tax payable by service receiver). If not, please specify any decided cases or other base?

 

And if dealer (serice provider) pays the service tax on commission agency services, can he avail CENVAT on the same?

Replies (2)

Hello Sir,

I am IRDA general insurance agent for past few years now i got a notice from service tax saying i have crossed 10 lac limit per annum and i need to pay service tax on my commission received from insurance company

kindly advice on the above whether individual agent is liable to pay service tax on commission received from insurance company 

 

 

 

Hello Senthil. Sorry for late reply. First of all, no need to worry about notice. You will come under ambit of service tax from your 1st rupee. 10 Lakhs limit not applicable to you. Because, reverse charge mechanism is applicable to Insurance agency service. The Insurance company will pay the service tax on behalf of you. So, you dont need to pay it again. But you should register as service tax provider and file the service tax return duly mentioning that you are an insurance agent and reverse charge mechanism is applicable to you.

 

PLease check once your other services

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