Commitment charges on working capitalism
This query is : Resolved
Vijay Goyal
(Querist)
31 December 2015
bank has charged penal interest@0.5% for non utilisation of 60%of sanctioned working capital .we have utilizied 38 % in septamber quarter say 60 -38 = 22%under utilisation but bank has charged commitment charges on 100-38 =62% it is unethical .please advice correct method of calculating commitment charges ( as per RBI Guide line). and as commentment charges are part of interest so i think service tax is not applicable on this part please cleaify
CA R SEETHARAMAN
(Expert)
02 January 2016
Commitment charges are not part of interest hence liable for service tax. Check the agreement terms on commitment charges.
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