Service tax on credit card interest

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This query is : Resolved

shiv (Querist)

09 August 2012 Why should credit card companies be charging service tax to their customers on interest demanded for late payments of credit debt. There is no service tax demanded on interest paid on loans, so why this anomaly?

Also if I buy some merchandise worth 100 rupees by using credit card then the credit card companies earn around 1 rupee as rest is refunded back to the shopkeepers (Rs 99). Now my query is should service tax be charged on the 1 rupee gross or can the credit card companies further reduce the taxable value of this one rupee by saying they have acted as pure agent on insurance premiums paid etc? Is further deductions allowed?

Amol S Joglekar

Amol S Joglekar (Expert)

09 August 2012 with effect from 1/7/2012, they are epected to stop this.... let us see how the things take shape. Negative list clause n

CA Ayush Agarwal

CA Ayush Agarwal (Expert)

23 February 2013 Dear Author,

Well, This Question is still Contradictory Part.

But There are Some ruling Related to This Issue, and In Those ruling, Contention of Assessee was held Correct.i.e Service Tax Shouldnt be Charged.
Refer Case of Central bank, Bangalore Bench CESTAT.

Regards,

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