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Our Bureau

Mumbai , Sept. 16

ALL the major regional and online commodities exchanges have informed their members that service tax levy of 10 per cent (plus 2 per cent education cess) on commodity brokers is levied from September 10 as per notification no 18/2004 dated September 10 issued by the Ministry of Finance.

Members of a recognised exchange are covered by service tax under a new Sub-clause (ZZY) added in Clause 105 to Section 65 of Finance Act 1994.

Members of an association recognised under the provisions of Forward Contracts (Regulation) Act, 1952 will be liable to pay service tax on the amount of transaction fee charged by them from their clients for providing services in relation to forward contracts.

The service tax will be 10 per cent of the brokerage. In addition, an education cess at the rate of 2 per cent of the service tax is also chargeable. The net impact, therefore, will be 10.20 per cent.

"Our members have been requested to refer Service Tax Rules, 1994 for registration with the Central Excise Department and payment of taxes," an official of a multi commodity exchange said.

Members are advised to obtain registration with the local Excise Department (Service Tax) and deposit service tax as well as education cess in accordance with the Service Tax rules. Members having branch offices at various places are required to get registration at one central place if the billing is centralised at that place. If bills are issued from branches, each such branch will require registration at the place of location (refer Sub - Rule (2) and (3) of Rule 4 of Service Tax Rules, 1994), the official said.

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