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Processing fees on unsecured loan

This query is : Resolved 
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(Querist)
26 January 2015 Dear Sir,
One of my friend is a money lender holding ML license in his personal name, he intends to start a proprietorship concern and distribute unsecured personal loans, now when he charges processing fees does he has to deduct service tax on the PF and also interest will be collected by him from his clients at 1 % per month does service tax is applicable on his interest income also, please clarify.
Awaiting your reply in return.
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CA Robin Betala

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CA Robin Betala (Expert)
27 January 2015 Interest on Personal Loan are not chargeable to service tax but processing fees if exceed exemption limit will be liable to service tax
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