TinaM (...) (43 Points)
26 June 2013Dear Sir/Madam,
My client, when has surplus funds in his bank A/c approaches broker who in turn will invest funds in certain bank FD's from which that broker receives some part of commission from that bank in which funds are invested.
That broker in turn passes on some part of that commission to my client.
Should the service tax be levied by my client on that portion of commission transferred to him by that broker ?
Hadi Husain Husaini
(IDT Consultant)
(99 Points)
Replied 27 June 2013
1. There is no provision of service by your client to the broker, However the commission money received by your client can be in the nature of consideration received against lending of money.
The above is exempt under 66D(O) which states that services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount
TDS Rate on Payments of Commission or brokerage under section 194H of Income Tax Act
TDS Rate of 10% will be applicable on payment of commission or brokerage by person other than Individual and HUF to any other person, and then they have to deduct TDS at the rate of 10% but commission or brokerage for financial year should be greater than Rs 5000/-.
If the above is not accounted for any of the above, then it will be taxed as gift if greater than Rs 50,000 under section 56(2)
TinaM
(...)
(43 Points)
Replied 28 June 2013
Sir,
But my client receives consideration in nature of Commission/Brokerage than it shall not be covered by the Section 66D(n) as it says that the consideration should be received in nature of Interest or discount.
Hadi Husain Husaini
(IDT Consultant)
(99 Points)
Replied 29 June 2013
Well since he is getting something on his investment, you can quanitfy it as additional interest. Just an opinion
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