Service tax department has asked a Bank "to reverse proportionate cenvat credit for non-taxable services provided by the Bank and pay 8% of interest on loans".
What is the legal position?
Thanks,
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Input service tax credit for Bank
Replies (2)
Paying 8% on interest would be an economic catastrophy as credits in all may not be more than 1-2%.
Whether interest is a service is to be decided also before proportinate credit is availed.
Yes, 8% is catastrophic I understand. But, as the law stands now (considering the april '08 amendment), is it necessary to reverse proportionate cenvat credit with respect to interest on loans for a bank?
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