Rate of service tax on insurance commission

[OM PRAKASH]

Is an insurer correct in deducting 6.18% service tax from insurance commission paid to its Agents.

AI Summary

Dispute Over 6.18% Service Tax Deduction from Insurance Agents' Commissions Sparks Debate on Contractual Terms and Liability A query was raised about whether insurers are correct in deducting a 6.18% service tax from the insurance commission paid to agents. One respondent argued that the service tax liability lies with insurance companies, and thus they should not deduct it from agents' commissions, as the contractual terms would prevail. Another respondent stated that the service tax is applicable to services provided by agents, and insurance companies are responsible for paying it. The commission is considered inclusive of service tax, making the deduction appropriate. Agents could negotiate higher commissions or protest since the tax paid is available as CENVAT credit to companies.