Service tax on commission on insurance company
Mukesh Khandelwal
(Querist) 12 May 2013
This query is : Resolved
Dear Sir, One of my client have income from authorized service station of two whiles. My client paid service tax liabilities on these receipts. My client has a further income by commission on insurance service from united India limited. Is this commission also having a tax liabilities, thus my client had not claimed and paid any service tax on this commission? What is the legal provision? Service tax audit cell issue an notice regarding service tax on this commission after audit. Plz advice me.
With regards
Mukesh khandelwal
9828242065
raghavender
(Expert) 16 May 2013
As per the definition of business auxiliary services, services as commission agent are considered business auxiliary services. However services of commission agents have been exempted from service tax w.e.f. 1st July, 2003 vide notification No.13/2003-Service Tax dated 20th June 2003. Commission agent has been defined in the notification, as a person who causes sale or purchase of goods, on behalf of another person for a consideration, which is based on the quantum of such sale or purchase. It may be noticed that the exemption under this notification is for a commission agent while the services of a consignment agent remain taxable under the category of Clearing and Forwarding services.
Please note that Section 68(1) of the Finance Act, 1994 (in short ‘the Act’) provides for payment of service tax by the service provider. However, Section 68(2) of the Act empowers the Central Government to notify the persons liable to pay service tax in respect of certain taxable services as may be specified. In exercise of the said powers, the Central Government has issued Notification No. 30/2012-ST dated 20-06-2012 effective from 01-07-2012 specifying the persons who are liable to pay service tax in respect of certain taxable services provided therein. The same includes Services rendered by the Insurance Agent to the Insurance Company and the liability of payment of payment of Service Tax is on Service Recipient i.e. Insurance Company. Further, the services rendered by Insurance Agent was also covered under Reverse Charge Mechanism in the Old Regime of Service Tax.
