Payment and applicability of service tax

[Guest]

we have started the business as an agent of hdfc bank from feb2006 and the first payment was received was on may 2006 so for the first quarter the turnover is 257641(april-june)i have just registered for the service tax.the total turnver is now 20 lacs,my question is that will i get the benefit of rs.4 lacsthat means i have to paythe service tax on the balance amount(20-4)=16lacs. so the first quarter service tax liability does not arise,is that true some tax consultant has suggested please help

[Madhukar N Hiregange]

It maybe considered as abranded servcie and therefore not eligible for the 4 lakhs exemption. Since ST is an indirect tax you are assumed to pass on the burden to the main servcie provider i.e. HDFC.

AI Summary

Small service exemption may not apply to branded agency services, and tax burden is passed to the principal. If an agency arrangement is characterised as a branded service, it may be ineligible for the small service exemption, potentially creating service tax liability for the agent; in any event the incidence of the indirect tax is typically considered passed to the principal service provider.