Stock Broker - Taxable Services - As appliable on or before 30-6-2012 - Service Tax

Stock-Broker (w.e.f. 1.7.1994 - Stock Broker) (Sub Broker from 10.09.2004 to 31.08.2009) Accounting Code: Tax = 00440008, Others = 00440009 What is taxable - 65(105)(a) Any service provided or to be provided any person, by a stock-broker in connection with the sale or purchase of securities listed on a recognised stock exchange; Meaning of Recognized stock exchange - 65(90) "recognised stock exchange" has the meaning assigned to it in clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956; As per clause (f) of section 2 of the Securities Contracts (Regulation) Act, 1956 "recognised stock exchange" means a stock exchange which is for the time being recognised by the Central Government under section 4. As per section 4 of the Securities Contracts (Regulation) Act, 1956 (1) If the Central Government is satisfied, after making such inquiry as may be necessary in this behalf and after obtaining such further information, if any, as it may require: (a) that the rules and bye-laws of a stock exchange applying for registration are in conformity with such conditions as may be prescribed with a view to ensure fair dealing and to protect investors; (b) that the stock exchange is willing to comply with any other conditions (including conditions as to the number of members) which the Central Government, after consultation with the governing body of the stock exchange and having regard to the area served by the stock exchange and its standing and the nature of the securities dealt with by it, may impose for the purpose of carrying out the objects of this Act; and (c) that it would be in the interest of the trade and also in the public interest to grant recognition to the stock exchange; it may grant recognition to the stock exchange subject to the conditions imposed upon it as aforesaid and in such form as may be prescribed. (2) The conditions which the Central Government may prescribe under clause (a) of sub-section (1) for the grant of recognition to the stock exchanges may include, among other matters, conditions relating to- (i) the qualifications for membership of stock exchanges; (ii) the manner in which contracts shall be entered into and enforced as between members; (iii) the representation of the Central Government on each of the stock exchanges by such number of persons not exceeding three as the Central Government may nominate in this behalf; and (iv) the maintenance of accounts of members and their audit by chartered accountants whenever such audit is required by the Central Government. (3) Every grant of recognition to a stock exchange under this section shall be published in the Gazette of India and also in the Official Gazette of the State in which the principal office as of the stock exchange is situate, and such recognition shall have effect as from the date of its publication in the Gazette of India. (4) No rules of a recognised stock exchange relating to any of the matters specified in sub- section (2) of section 3 shall be amended except with the approval of the Central Government. Meaning of Securities - 65(93) "securities" has the meaning assigned to it in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956; As per clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956; "securities" includes- (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of any incorporated company or other body corporate; (ia) derivative; (ib) units or any other instruments issued by any collective investment scheme to the investors in such schemes; (ii) Government securities; (iia) Such other instruments as may be declared by the Central Government to be securities; and (iii) rights or interests in securities.; Meaning of Stock Borker - 65(101) "stock-broker" means a person, who has either made an application for registration or is registered as a stock-broker [****], as the case may be, in accordance with the rules and regulations made under the Securities and Exchange Board of India Act, 1992 (15 of 1992); ************************* A. As per Paragraph No 6. of Circular No. 96/7/2007 dated 23/8/2007 states that :- "6. This circular supersedes all circulars, clarifications and communications, other than Orders issued under section 37B of the Central Excise Act, 1944 (as made applicable to service tax by section 83 of the Finance Act, 1994), issued from time to time by the CBEC, DG (Service Tax) and various field formations on all technical issues including the scope and classification of taxable services, valuation of taxable services, export of services, services received from outside India, scope of exemptions and all other matters on levy of service tax. With the issue of this circular, all earlier clarifications issued on technical issues relating to service tax stand withdrawn." B. Extracts from Circular No. D.O. F. No.334/13/2009-TRU dated 6-7-2009 3.2 Stock-broker Service [section 65(105)(a)]: The present definition of a stockbroker [section 65(101)] includes sub-broker as well. A number of cases have been booked in the recent past where the sub-brokers have been asked to pay tax on the remuneration they receive from the stockbroker. Previously, the sub-brokers could issue contract note and receive amounts from the investors. With effect from 01.06.2005, SEBI regulations have prohibited sub-brokers from these activities. The role of sub-brokers has thus reduced substantially. Considering that the entire broking charges are anyway taxable at the hands of stock-broker and a large number of small sub-brokers have to comply with the service tax laws, the subbrokers have been excluded from the purview of service tax by making suitable amendment in the definition of stock-broker. It is also clarified that such subbrokers should also not be charged to service tax as commission agents under Business Auxiliary Service. For this purposes, specific exemption notification would be issued at the appropriate time.