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

Bank Agent Questions Service Tax Exemption for 2006 Operations; Consultant Warns of Branded Service Implications A business agent for a bank inquires about their service tax obligations after starting operations in February 2006, with a turnover of 20 lakhs by the first quarter. They ask if they qualify for a 4 lakh exemption, thus reducing their taxable amount to 16 lakhs. A tax consultant suggests that the exemption might not apply because the service could be considered branded, and since service tax is indirect, the cost is typically passed to the main service provider, in this case, the bank.