TaxTMI 
TaxTMI 
An oil company is recovering from its customers, the amount it paid to bank for clearance of outstation cheques.Amt recovered is greater than the amt paid to bank.Bank is charging service tax on the commission portion of the amt.Whether the bank is right in its approach? If yes , under which service head it is charging? Also whether co. should in turn charge service tax? If yes, on which amt. and under which head?
Service tax on commission
Kuldeep Jain
Oil company and bank service tax on commission confirmed as valid under Finance Act, 1994 provisions. An oil company is recovering more from its customers than it paid to the bank for clearing outstation cheques. The bank charges service tax on the commission portion of the amount. The query is whether the bank is correct in doing so and under which service head it charges. The response confirms that the bank is right in charging service tax on the commission. The company may also need to charge service tax if its activities fall under taxable provisions of the Finance Act, 1994. (AI Summary)