Reimbursement of Service Tax
This query is : Resolved
15 February 2008
Can a bank get credit for its reimbursement of Service Tax paid by its DSA (Personal Loan)means a Franchise given by bank for arranging personal loan
I Want to get basis of the your answer, if possible. Also see that it is proper enough to explain my client
I Want to get basis of the your answer, if possible. Also see that it is proper enough to explain my client
S.Srinivasaraghavan
(Expert)
15 February 2008
What is DCA?
How the reimbursement arises?
How the reimbursement arises?
CA Hemant T Dewani
(Expert)
15 February 2008
pl clerify uou q. properly
22 February 2008
The best option would be to ask the franchise to charge service tax to the bank.
The Franchise should register under service tax.
When charging the bank for reimbursement it would be ideal to raise a bill for services provided to the bank.
If this is not workable then from the plain reading of the text of the act the service tax credit cannot be claimed as the service tax payer (DSA)in his capacity as a service provider has charged /collected and paid to the government and bank will not be eligible to claim.
Morever bank is not the receiver of the service of DSA on account of service tax paid by DSA.
Mere reimbursement will not result in eligibility.
As per the cenvat credit rules the service has to be consumed in relation to the business by the receiver in providing taxable output services, but here the service provided by DSA does not make the bank a recepient, but merely paying the cost incurred by the DSA.
The Franchise should register under service tax.
When charging the bank for reimbursement it would be ideal to raise a bill for services provided to the bank.
If this is not workable then from the plain reading of the text of the act the service tax credit cannot be claimed as the service tax payer (DSA)in his capacity as a service provider has charged /collected and paid to the government and bank will not be eligible to claim.
Morever bank is not the receiver of the service of DSA on account of service tax paid by DSA.
Mere reimbursement will not result in eligibility.
As per the cenvat credit rules the service has to be consumed in relation to the business by the receiver in providing taxable output services, but here the service provided by DSA does not make the bank a recepient, but merely paying the cost incurred by the DSA.
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