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of <h1>Service Tax Not Applicable on Re-Insurance Commission Deductions; Clarified as Expense Sharing, Not Business Auxiliary Service.</h1> The circular addresses the issue of service tax on re-insurance commissions. It clarifies that the arrangement between insurance companies and reinsurers involves sharing expenses rather than providing a Business Auxiliary Service (BAS). The insurance company deducts a portion of the premium for administrative costs, which is not considered a commission. Both parties already pay service tax on their respective premiums, and no additional service tax should be levied on these deductions. The Board advises that pending cases should be resolved based on this clarification, as no service is provided by the insurance company to the reinsurer.
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