Amount consideration

[d.v. gupta]

one of my client is a CUSTOM HOUSE AGENT. HE IS PAYING FREIGHT AS WELLAS OTHER EXPENSES ON BEHAF OF HIS CUSTOMERS. HE BILLED THE CUSTOMER FOR EXP. INCURRED ON THEIR BEHALF AND PROFESSIONAL CHARGES FOR HIS WORK. KINDLY ADVISE WHETHE WE SHOULD TAKE THE GROSS AMOUNT FOR SAL/ RECEIPT OR ONLY PROFESSIONAL CHARGES

[Mukesh Kumar]

As per the provisions of service tax, the expenses incurred in the capacity of pure agent are not forming part of gross amount charged for providing taxable services. You need to visit the terms and conditions of your contract to ascertain the facts. whether CHA is earning any profit out of the expenses incurred on behalf of the client is a substantial and crucial point which helps to determine the issue.

AI Summary

Custom House Agent: Taxable Income Based on Professional Charges, Not Gross Amount, per Service Tax Provisions. Review Contracts. A client, a custom house agent, pays freight and other expenses on behalf of customers and bills them for these expenses along with professional charges. The query seeks advice on whether to consider the gross amount or only the professional charges for income tax purposes. The response clarifies that under service tax provisions, expenses incurred as a pure agent do not form part of the gross amount for taxable services. It suggests reviewing contract terms to determine if the agent profits from these expenses, which is crucial for resolving the issue.