In the pursuit of more revenue or profits, consumers are being charged
more than what the law (often the letter and more often the spirit)
permits. Many banks and financial institutions are charging maintenance
charges separately, when they should be covered by the profits earned by
investing the depositors' money. City Corporations are levying
additional fees and cesses for providing certain services, when the law
says that these services should be covered by the property tax levied by
the Corporations.
Another such example is before us. We have received complaints
that some share brokers are levying postage fees when such postage
should be covered by the standard brokerage fee collected by the broker.
We see merit in such complaints.
In addition to charging postage fee separately, when it should
be covered by the brokerage fees, we noticed that the broker had charged
Rs. 10 for postage to the consumer-investor when the actual postage was
only Rs. 2.50. The broker had further charged Rs. 1.24 as service tax
on the postage. But there is no service tax on ordinary postage! Since
there is no legal provision for service tax on ordinary postage, it can
not be remitted to the government. Then, where does the money thus
wrongly collected from the investors go?
We also noticed that there are some brokers who do not charge
separately for postage and service tax. So we have asked the Securities
Exchange Board of India and the National Stock Exchange of India the
following questions:
1) Is a broker entitled to charge separately over and beyond the
standard brokerage feesÿfor posting mandatory contract note and
statement of accounts to investors?
2) Is a broker entitled to recover a service tax from the investor on an ordinary postÿfranked at Rs 2.50 which is exempt from service tax? Can a broker charge Rs. 10 for postage when he incurs only Rs. 2.50 towards actual postage? Do SEBI rules and NSE guidelines allow such charges?
2) Is a broker entitled to recover a service tax from the investor on an ordinary postÿfranked at Rs 2.50 which is exempt from service tax? Can a broker charge Rs. 10 for postage when he incurs only Rs. 2.50 towards actual postage? Do SEBI rules and NSE guidelines allow such charges?
If this malpractice is allowed more heads of illegal charges
and irregular service tax are likely to be introduced to harass the
consumer-investors.
V.Mahesha, Mysore Grahakara Parishat