TMI BlogBank Charges paid by Foreign Banks — Processing charges for Import/Export documents — ClarificationsX X X X Extracts X X X X X X X X Extracts X X X X ..... ding some services in relation to forwarding of documents and realisation of proceeds by way of remittances of money. As per the law, Service Tax is required to be paid by the recipient of services in India, in cases where services are provided by a foreign person. In order to examine the factual and legal position, a meeting of major banks along with representatives of Indian Banks Association (IBA) and Foreign Exchange Dealers Association of India (FEDAI) was held and their views were taken. After examination of the factual and legal position, the following clarification is issued. 2. Banks in India are providing services to their customers who may be exporters or importers. For the purpose of forwarding of documents and realisation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort transactions, subscribe to the Uniform Rules for Collection of Commercial Paper, International Chamber of Commerce Brochure No. 522 (URC 522) effective from 1-1-1996/ Uniform Customs and Practice for Documentary Credits (UCP 600), both issued by International Chamber of Commerce, effective from 1-7-2007, which provide Articles containing terms and conditions which are binding on all the parties subscribing to them. Thus, the need for agreements between banks is superfluous, as they subscribe to the URC 522 and UCP 600, and only the rates of charges need to be periodically fixed. 3. While going through sample import-export documents obtained from the banks, it was noticed that some of the banks are affixing stamps on documents stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... importer, in that case the foreign bank recovers the charges from banks in India only and in case of import transactions, if the foreign exporter does not bear the foreign bank charges, the same are recovered by the foreign bank from the bank in India. The combined reading of the relevant articles in the said two internationally accepted conventions, undoubtedly show that services are provided by the foreign bank to the bank in India. Therefore, as per the Service Tax law, as a recipient of service, the bank in India, is required to pay Service Tax under erstwhile Section 66A of the Finance Act prior to 1-7-2012 and under the provisions of Notification No. 30/2012-S.T., dated 20th June, 2012 after 1-7-2012. 5. The views of the ban ..... X X X X Extracts X X X X X X X X Extracts X X X X
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