TMI Blog2014 (1) TMI 1003X X X X Extracts X X X X X X X X Extracts X X X X ..... the Securities Exchange Board of India) deal in Government Securities, issued by the RBI on behalf of the Government of India, as a part of the central Government's market borrowing program. The general practice is that the RBI invites bids from the Primary Dealers, who in their bids indicate the amount to be underwritten and the underwriting fee expected by them. RBI examines these bids and decides the amount to be underwritten and underwriting fee to be paid to a Primary Dealer. Underwriting Fee is also known as Underwriting Commission in common parlance. Thus the conclusion drawn is that government securities are not securities of a body corporate - service tax liability does not arise on Underwriting Fee or Underwriting Commission recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to pay service tax in respect of government securities. 4. We find that Board now issued clarification vide Circular No. 126/8/2010-S.T. dated 10/08/2010 that government securities not the securities of body corporate relevant portion of the Board Circular is reproduced below: Government of India Ministry of Finance (Department of Revenue) Central Board of Excise Customs, New Delhi Subject: Service tax on commission received by Primary Dealers dealing in Government Securities - regarding. A representation has been received seeking clarification whether service tax is leviable on the underwriting commission received by the Primary Dealers for the auction of Government Securities. 2. The matter has been exam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rities having zero default risk. Reserve Bank of India only manages the issue and also auction of Government Securities on behalf of the Government of India. In effect, Primary Dealers registered with the RBI (as opposed to registration with the Securities Exchange Board of India) deal in Government Securities, issued by the RBI on behalf of the Government of India, as a part of the central Government's market borrowing program. The general practice is that the RBI invites bids from the Primary Dealers, who in their bids indicate the amount to be underwritten and the underwriting fee expected by them. RBI examines these bids and decides the amount to be underwritten and underwriting fee to be paid to a Primary Dealer. Underwriting Fee is al ..... X X X X Extracts X X X X X X X X Extracts X X X X
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