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: ARTICLES ON INPUT TAX CREDIT IN VAT :: Central Excise rule to resale the machines to a new company :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: VAT Audit :: ACCOUNTING STANDARDS :: form 3cd :: due date for vat payment :: cpt :: empanelment :: TDS :: articles on VAT and GST in India :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARD :: list of goods taxed at 4% :: VAT RATES
 
 
Service Tax »
 Interpretation Of Central Goods And Services Tax (Cgst) Act (Part-7)(Meaning Of Important Terms)
 GST Council may clarify on tax rate for solar modules at 3 June meeting
 Rules not ready, key e-way bill for GST may be delayed, says top official
 How Goods and Service tax will benefit the nation
 GST implementation may increase expense ratio of fund houses
 GST structure: an unfortunate compromise
 Extension Of Provisional Attachment Under Service Tax Provisins
 How favourable will GST be for Karnataka?
 GST rate impact: Here’s how the new tax can carry a greater punch
 E-way Bill - movement of goods under GST
 How the GST rates will affect your money

Banks get service tax relief on deposit insurance premium
March, 24th 2009

Revenue authorities have done banks a good turn towards the close of the financial year.

By clarifying that the deposit insurance premium, collected by the Deposit Insurance and Credit Guarantee Corporation (DICGC), is not taxable, the authorities have saved banks, which ultimately would have borne this burden, from paying taxes totting up to a few thousand crore rupees.

The Commissionerate of Central Excise and Service Tax, Large Taxpayer Unit, Mumbai, in its missive to the Corporation in early January 2009 had underscored the fact that deposit insurance activity is liable to service tax (at 12.36 per cent) with effect from May 1, 2006.

The Corporation, which is the sole provider of deposit insurance services for banks, in turn, cautioned banks through a circular in January that in case service tax is applicable on the deposit insurance premium, then all banks may have to pay the same at short notice, over and above the premium being paid as per the relevant rate.

After the DICGC took up the matter with the Commissionerate, the latter cleared the air saying the charges collected by DICGC are not taxable under the taxable service of General Insurance Service.

According to RBI data, banks had deposits aggregating around Rs 34,42,000 crore as of end-September 2008. If the authorities had pressed their claim then a rough, back-of-the-envelope calculation shows that banks collectively would have had to shell out around Rs 4,250 crore towards service tax on deposit insurance for just the first half of the year. The impact on banks could have been several times this amount if revenue authorities demanded arrears from May 2006.

All registered insured banks (commercial banks, including branches of foreign banks in India, regional rural banks, local area banks, and co-operative banks) are required to pay to the DICGC deposit insurance premium at the rate of 10 paise a year for every deposit of Rs 100 at half-yearly intervals.

Governed by the DICGC Act, 1961, the corporation insures bank deposits such as savings, fixed, current, and recurring up to Rs 1 lakh a depositor/bank. The premium paid by the insured banks to DICGC is required to be absorbed by the banks themselves; for depositors, the benefit of this service is free of cost.

 
 
Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Desktop Application Development Outsourcing Desktop Application Development Offshore Desk

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