REVERSE CHARAGE MECHANISM

[DR.MARIAPPAN GOVINDARAJAN]

The telecom service provider is collecting telephone bills from the subscribers. In addition to this the postal department is also collecting telephone bills on behalf of the telecom service provider. For this the post office collects Rs.10/- per commission per bill. For this commission service tax is liable to be paid. The doubt is whether such service tax is payable by the post office, the service provider or the telecom service receiver under the Reverse Charge Mechanism. The views of the experts are solicited.

AI Summary

Liability for Service Tax on Postal Department's Commission for Telecom Bill Processing Under Reverse Charge Mechanism Explored A query was raised regarding the liability for service tax on commissions collected by the postal department for processing telephone bills on behalf of a telecom service provider. The discussion sought to determine whether the postal department, the telecom provider, or the subscriber is responsible for the tax under the Reverse Charge Mechanism. One response noted that services by the government, including the postal department, are generally exempt from service tax unless they involve agency services for non-government entities, which are taxable. Another response confirmed that agency services on a commission basis are indeed liable for service tax.