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Availbility of cenvat credit of service tax on bank charges

Jinesh Shah (freelancing, industry) (105 Points)

19 September 2013

Hi,

Reqd ur help on this one.

A manufacturing concern, manufacturing Hi-tech rubber products, avails an overdraft facility from a bank. The bank, as usual, charges processing fees on the application. It also charges od/cc charges charges regularly.

So my query over here is can this organization avail cenvat credit of service tax charged on

Processing fees
OD/CC charges.

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13 Replies

CA LOVELY ARORA (C.A. B.Com (H) Graduate) (2151 Points)
Replied 19 September 2013

Dear Sir,

I think the same should not be allowed as CENVAT Credit... as def. of "input service" means "used by the manufacturer, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products upto the place of removal"... and i don't think the service of OD etc. is related to manufacturing of final products.. directly or indirectly....

1 Like

Saurabh Maheshwari (B.com,ACA) (5923 Points)
Replied 19 September 2013

Bank charges are classifed under "Banking & Other Financial Services". Since they are for your business purpose, they fall under the definition of input service under Cenvat Credit Rules 2004. You can take Cenvat credit BUT you need an invoice/bill/challan with you in case of Dept query. In case of bank, you may only have bank statement. You must maintain the relevant extract of that statement showing that service tax is charged. Otherwise, in case your Excise inspector asks you for supporting, you may need to pay your bank extra for retriving old bank statements or else reverse the credit.

2 Like

Akash Jain (CA Final Student) (261 Points)
Replied 19 September 2013

ST on Processing fees and OD charges eligible as input available for Cenvat Credit if the Loan/OD facility is for Business purpose.

pintu ( Executive) (174 Points)
Replied 27 September 2013

defination of input service includes the word banking. so credit eligible

SSachin (ss) (28 Points)
Replied 26 July 2015

Can we take service tax credit on processing fees of the bank for last 5 years.

1 Like

Niraj Kumar Sinha (Sr. Officer, SPSIL) (648 Points)
Replied 27 July 2015

For availing Cenvat on Service tax paid on Bank charges, you can ask to bank to provide a certificate on monthly or quarterly basis. On the base of that certificate you can avail cenvat.