SUMMARY 

Name of Service

What is not Included

What is included

Telephone/Pager/Telex Service

Initial Deposit

(Security deposit at the time of taking telephone connection)

Security deposit adjusted in Bill

Airtravel Agent

Airfare Collected from customer

commission received by the air travel agent from the airline

Rail travel agent

the rail fare collected

Tax charged by Government on airline ticket (even by foreign government)

the commission or any amount received by the rail travel agent from the Railways or the customer;

 

Insurance Service by insurance Company to Customer

-

Insurance Premium charged from customer

Insurance Commission received by agent from Insurance Company

 

Commission received from Insurance Company

Clearing forwarding Agent

 

Amount paid by client as commission

Authorized Service Station of Two wheelers /car

 

Amount received from car manufacturer

All Services

Interest on late payment

 

Accidental damages not related to provison of service

Demurrage collected from customer for providing service beyond original period

 

 

 Rule 6 in detail

 Value of the taxable services shall includes

  • the commission or brokerage charged by a broker on the sale or purchase of securities including the commission or brokerage paid by the stock-broker to any sub- broker;
  • the adjustments made by the telegraph authority from any deposit s made by the subscriber at the time of application for telephone connection or pager or facsimile or telegraph or telex or for leased circuit;
  • the amount of premium charged by the insurer from the policy holder
  • the commission received by the air travel agent from the airline;
  • the commission, fee or any other sum received by an actuary , or intermediary or insurance intermediary or insurance agent from the insurer;
  • the reimbursement received by the authorised service station , from manufacturer for carrying out any service of any motor car, light motor vehicle or two wheeled motor vehicle manufactured by such manufacturer;
  • the commission or any amount received by the rail travel agent from the Railways or the customer;
  • t he remuneration or commission, b y whatever name called, paid to such agent by the client engaging such agent for the services provided by a clearing and forwarding agent to a client rendering services of clearing and forwarding operations in any manner
  • the commission, fee or any other sum, by whatever name called, paid to such agent by the insurer appointing such agent in relation to insurance auxiliary services provided by an insurance agent; and
  • the amount realised as demurrage or by any other name whatever called or the provision of a service beyond the period originally contracted or in any other manner relatable to the provision of service.”;

 

 

 

Value of Service does not include

  • initial deposit made by the subscriber at the time of application for telephone connection or pager or facsimile (FAX) or telegraph or telex or for leased circuit;
  • the airfare collected by air travel agent in respect of service provided by him;
  • the rail fare collected by rail travel agent in respect of service provided by him; and
  • interest on delayed payment of any consideration for the provision of services or sale of property, whether moveable or immoveable.
  • the taxes levied by any Government on any passenger travelling by air, if shown separately on the ticket, or the invoice for such ticket, issued to the passenger.
  • accidental damages due to unforeseen actions not relatable to the provision of service; and
  • Subsidies and grants disbursed by the Government, not directly affecting the value of service.

 

Exam Questions

Question 5
Compute the service tax liability of Mr. A, an air travel agent, for the quarter ended
September 30, 20XX using the following details:-

Particulars  (Rs.)
Basic air fare collected for domestic booking of tickets  50,00,000
Basic air fare collected for international booking of tickets  80,00,000
Commission received from the airlines on the sale of domestic and international tickets 5,00,000

In the above case, would the service tax liability of Mr. A be reduced if he opts for the special
provision for payment of service tax as provided under rule 6 of the Service Tax Rules, 1994
instead of paying service tax @14% ?
Note: Mr. A is not eligible for the small service providers’ exemption under Notification No.
33/2012 ST dated 20.06.2012 and service tax has been charged separately.

View Answer

 

 

  1. Service Tax
  2. Valuation of Taxable Service

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