service tax on handling & transaction charges

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arti jindal (Querist)
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22 December 2007 wether service tax shall levied on handling & transaction charges charged by a stock brokers from its clients?

Dayal

Dayal (Expert)
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13 February 2008 Yes service tax shall be applicable as per the following definition

Stock Broker’ means a stock-broker who has either made an application for registration or is registered as a stockbroker in accordance with the rules and regulations made under the Securities and Exchange Board of Indian Act, 1992 (15 of 1992).”

(Section 65(69) of Finance Act, 1994 as amended) The service provided by the stock broker becomes liable to pay Service Tax subject to the conditions that the

(a) Stock Broker should be registered as per SEBI Act, 1972.

(b) Stock should be listed in the Stock Exchange.

(b)The Stock Exchange must be recognized Stock Exchange as per Securities Contract (Regulation) Act, 1956.

(c) The Sale/Purchase should be on behalf of an investor.

Taxable event and scope of service:

Taxable service means any service provided to an investor by a stockbroker in connection with sale or purchase of securities listed on a recognized Stock Exchange.

(Section 65(72)(a) of Finance Act, 1994 as amended)