service tax on insurance co's agent

It is the normal rule that the service provider is to pay the service tax. In respect of this category of this service, naturally insurance auxiliary service provider is required to pay the service tax. An exception however has been made to this rule, namely, that in the case of insurance agents, the person liable to pay the service tax will be the concerned insurance company who has appointed the agent and not the agent himself. This is by a reason of rule 2(1)(d)(ii) of the Service Tax Rules. This is more for easy administration in of the tax and to save the burden on the individual agents/intermediaries of the requirements of compliance under the Act and the needless addition to unwieldy number of assessees all over India. Where certain expenses are reimbursed on actual basis to the insurance intermediary or insurance agent such as for travelling expenses, board and lodging charges on actual basis, such expenses will not be includible for the purposes of computation of tax. Again under the service tax rules it is not the billing amount which is material but the amount actually received ultimately which is relevant for the purposes of paying the tax.