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Service Tax — Regarding brokerage - Service Tax - T No. 3/94 IndoreExtract Service Tax Regarding brokerage Trade Notice No. 3/94-Service Tax, dated 19-10-1994 of the Indore Collectorate Attention of the Trade is invited that certain doubts have been expressed by the trade and the field formations, requiring clarification from the Board. After considering the reports of the Collectorates, following clarifications are being issued :- 1. It has been represented by Collector of Central Excise, Kanpur that a Stock Broker registered with Kanpur Stock Exchange and is having his office branch outside the jurisdiction of Collectorate of Central Excise, Kanpur. Whether the Stock Broker should apply for registration in Kanpur Collectorate for his office outside the jurisdiction of Collectorate of Central Excise, Kanpur or with the Collectorate where his branch office is located. Decision : A Broker who is registered with Kanpur Stock Exchange has to apply for registration with Collectorate of Central Excise, Kanpur. All the offices of this broker irrespective of location will be registered with Collectorate of Central Excise, Kanpur. 2. Wheter sub-brokers are covered by Service Tax? Decision : At present sub-brokers are not covered. 3. Collector of Central Excise, Bolpur has raised the point that Sikkim Stock Exchange has not yet been recognised and whether Service Tax can be collected for the transaction in Sikkim Stock Exchange. Decision : Service Tax is required to be collected from Stock Brokers. Stock-Broker has been defined in the Act itself i.e. stock broker means a stock broker who has either made an application for registration or is registered as a stock-broker in accordance with the rules and regulation made under the Securities Exchange Board of India Act, 1992. Hence, all stock-brokers in the jurisdiction of Collectorate of Central Excise, Bolpur will be governed by service tax scheme. 4. Whether the amount of Service Tax charged/collected is required to be shown separately in the Contract Note/Bill? Decision : It is desirable for the reasons for transparency that Service Tax charged/collected is shown separately in the Contract Note/Bills. 5. Collector of Central Excise, Calcutta-I has raised the point that service brokers are engaged as underwriters. These Service Brokers are receiving commission for the Company which floats its securities into the market. Whether Service Tax is required to be levied on this commission? Decision : Taxable service means any service provided to an investor, by a stock-broker in connection with the sale or purchase of securities listed on a recognised stock exchange. The commission charged by stock-broker as underwriters is for floating securities. Hence, it is not covered.
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