Query on taxation, Service Tax

[Laijesh Gopi]

Hi,

I am from Kerala and I have a concern. The situation is like I am purchasing a web service and reselling it to my clients; still, the service provider would be the creator of the web service (I am just a link between the client and the service provider).

The business is in such a way that I am getting the service for Rs. 250 per person (login) including service tax. I am planning to sell it for Rs. 250. Will I have to include Service Charge in the bill to my clients? If so, how much?

Posts / Replies

[Rajesh Nathoo]

Dear Mr. Laijesh ,

You are acting as an intermediary between main service provider and client . The amount of Service tax u have to pay depends on your status as a pure agent or not .

 To qualify as a pure agent under Service tax laws certain basic conditions are to be satisfied e.g.

1.  The Service Receipient should not  u are acting as an agent and who is the main service provider .

2. U should not have any control on price to be charged from service receipient . i.e. Service Receipient should clearly know how much are ur service charges  and how much main service provider has charged u for the particular service .

3. There should be valid agreements between u and service providers and u and service receipients which should reflect u are acting as an agent in the whole process.  etc.

In case u satisfy the above conditions , u are liable to pay ST on only Service Charges as main amount charged by service provider would be reimbursable in nature . i.e.

In case u do not satisfy the above conditions , u are liable to pay ST on Rs 250. However u can take cenvat credit of ST charged by the Service Provider .