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TMI BlogService tax on interest chargedX X X X Extracts X X X X X X X X Extracts X X X X ..... Service tax on interest charged X X X X Extracts X X X X X X X X Extracts X X X X ..... vance. Sanjay Gupta Reply By Rajagopalan Ranganathan: The Reply: Sir, If the credit card company realises only interest , then such interest is not liable to service tax, as the transaction assumes the nature of loan. However, if penal amounts are recoverable for delayed payment of such loan such penal amount is chargeable to service tax since they are charges for tolerating an act or situatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which is a declared service under Section 66 E of Finance Act, 1994. Reply By Ganeshan Kalyani: The Reply: In my view interest paid you is an income to the Credit card issuer for providing service of financial assistance. The interest is a consideration liable to service tax. Reply By Ganeshan Kalyani: The Reply: Dear Rajagopalan sir, thanks for clarification. Reply By sanjay gupta: The Reply ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... : My credit card issuer clarify as under " We would like to clarify that any EMI which is billed on the card is a pure service in relation to credit card services, where post grant of EMI, the credit limit of the customer reduces. Section 65(33a) of Chapter V of the Finance Act, 1994 defines credit card service as under: "Credit card, debit card, charge card or other payment card serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices includes any service provided by a banking company, financial institution including non banking financial company or any other person issuing such card to a card holder." Since the above service is in relation to credit card service to the card holder, the same fall under the above charging section and is liable for service tax.Having explained this we wish to clarify that service tax w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill be applicable towards the interest component of EMI.
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Pl. confirm whether above clarification is correct of not?
Sanjay Gupta
Reply By MARIAPPAN GOVINDARAJAN:
The Reply:
It is only the interest on loan but not any fees on the services rendered by the bank. Further it does not amount to penal in nature. As such the views of Shri Rajagopalan is correct. X X X X Extracts X X X X X X X X Extracts X X X X ..... Discussion Forum - Knowledge Sharing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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