Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: articles on VAT and GST in India :: form 3cd :: TAX RATES - GOODS TAXABLE @ 4% :: VAT RATES :: ACCOUNTING STANDARD :: Central Excise rule to resale the machines to a new company :: due date for vat payment :: ACCOUNTING STANDARDS :: VAT Audit :: TDS :: ARTICLES ON INPUT TAX CREDIT IN VAT :: cpt :: list of goods taxed at 4% :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: empanelment
 
 
Service Tax »
 IT infrastructure firm of GST under scrutiny for tax evasion
 GST council OKs draft law on relief to states
 GST Network gets notice for avoiding service tax
 GSTN contract may attract tax
 GST Council may discuss tax rate on gold at Udaipur meet
 Govt may rework indirect tax estimates mid-way after GST
 GST Council meeting: States allowed to tweak taxpayer division after consulting Centre
 Government may rework indirect tax maths mid-way after GST entry
 Govt may rework indirect tax mid-way after GST entry
 GST rollout will reduce disparity among states
 GST: E-tailers oppose tax laws

No service tax on late payment charges by stock investors
December, 12th 2011

Stock market investors would not have to pay any service tax on any late payment charges paid by them to their brokers, provided such fines are shown separately in the account statement.

The Ministry of Finance has clarified the matter to the capital market regulator Sebi (Securities and Exchange Board of India), which in turn has informed the stock exchanges about the same.

On their part, the stock exchanges have issued a circular to their member brokers that no service charge should be deducted on late-payment charges collected by them from their clients.

The stock brokers typically levy a penalty or late- payment charges on their customers, if they do not make the required payments for their share purchases or to meet other obligations like payment of various fees.

However, there has been an ambiguity regarding the leviability of any service tax on such payments, as a result of which some brokers have been deducting service tax and some others have been not.

 

In a communication to various concerned authorities on this matter, the Central Board of Excise and Customs of the Ministry of Finance said that representations had been received by it "seeking clarification regarding leviability of service tax on the additional amount that is collected towards the delay in making payment to the stock brokers by their customers (as delayed payment charges) in respect of stock brokers' services."

The board (CBEC) said that it examined the practice in other similar segments and found that an amount collected for delayed payment of a telephone bill did not form a part of the value of taxable service. It also found that no service tax was being levied in some other similar segments.

"In a similar manner, delayed payment charges received by the stock brokers are not includible in taxable value as the same are not the charges for providing taxable service" and such charges were more in the nature of a penal charge, CBEC noted.

However, it said that the Finance Act provided for a service tax being chargeable on taxable value, which shall be the 'gross amount charged' by the service provider.

Therefore, a service tax would be chargeable on the entire amount, if the account statement, invoice or bill showed only the gross amount, without indicating the delayed payment charges separately.

"Delayed payment charges would not be includible in 'gross value charged' only if these charges are shown separately in the account statement/invoice/bill etc," the CBEC memorandum clarified.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
E-catalogue online catalogue E-brochure online brochure online product catalogue online product catalogue e-catalogue Indi

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions