Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
 
 
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
 
 
 
 
Popular Search: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: articles on VAT and GST in India :: ACCOUNTING STANDARDS :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: VAT Audit :: TDS :: empanelment :: due date for vat payment :: ARTICLES ON INPUT TAX CREDIT IN VAT :: ACCOUNTING STANDARD :: form 3cd :: VAT RATES :: cpt
 
 
« Service Tax »
 If GST not rolled out by Sept, there won't be taxation in country, warns Jaitley
 India’s E-Service Tax Will Add To Foreign Content Providers’ Woes
 GST Council to discuss model laws, tax jurisdiction today
 Tax Invoice Under GST
 Insurance may fall under 12% tax slab in GST, from 14% service tax currently
 GST draft makes it must for companies to pass tax benefit to consumers
 To speed passage, Government plans GST Bills as money Bills
 No service tax on train tickets booked through IRCTC till December 31
 GST Council meet postponed to December
 Banks integrating systems with RBI, GST Network to collect tax: Arun Jaitleya
 Service tax waived for online train ticket booking till Dec 31

Service tax finds several banking services taxable on scrunity
January, 18th 2014

The Department of Service tax has found several banking services taxable on scrutiny following the negative list of services.

According to officials close to the development, some of the contentious issues are availing tax credit for payment of premium for insuring deposits, services rendered on behalf of the Reserve Bank of India (RBI) and commission on foreign exchange business. At present the banks treat most of these services exempt but they are not as per the department, sources said

The Department of Service Tax has also issued show cause notices to several banks in raising demand.

Explaining this, an official source said the banks pay premium to Deposit Insurance and Credit Guarantee Corporation (DICGC) for insuring their deposit (fixed deposits, saving banks deposits and current account) and pay 12% of the total amount paid premium as service tax.

Then these banks take credit for the service tax paid on these items for payment of taxes on other taxable services. The credit is availed by the banks for paying the service tax on insuring these items (various deposits) as according to banks these deposits are output services as per service tax rules.

However the Department is of the view that as per the rule 6 of the Cenvat Credit rules 2004, these deposits form part of negative services and not output services. Cenvat rules make it obligatory to get credit for payment of taxes on output services and not negative services as per the negative list. An output service is defined as any taxable service within taxable territory of India but does not include negative services as per cenvat credit rules and reverse charge payments.

While the department has found several omissions by the banks on this account in its scrutiny amounting to a lapse of around Rs 2,000-2,500 crore across the banking sector, this issue is still is under deliberation, said sources

Similarly, the RBI pays commission to the banks for collecting government taxes – customs, service tax, income tax etc. These are services rendered by the banks on behalf of the RBI. While department contends that banks should pay service tax on the commission received, banks at present do no pay service taxes.

Kerala Bench of CESTAT (Customs, Excise and Service Tax Appellate Tribunal) held that banks will not pay services tax on commission received from RBI on these services.

The department is of the view that as per the negative list, services rendered by RBI are exempt from service but services to RBI and services undertaken on behalf of the RBI are taxable as these are rendered free. These banks receive commission for these services discharged on behalf of the RBI and hence should pay service tax.

To this effect, a total demand has been firmed up to the tune of Rs 80-100 crore and show cause notices have been issued to banks.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2016 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
SEO Services SEO LLC e-boost Search Engine Optimization Services Internet Marketing Services Website Placement Services On-site Webs

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions