According to Section 65 (105) (zm), any service provided or to be provided to any person, by a banking company or a financial institution including NBFC, or any other body corporate or commercial concern, in relation to banking and other financial services is a taxable service.
According to Section 65 (12), “banking and other financial services” means-
(a) the following services provided by a banking company or a financial institution including a non-banking financial company or any other body corporate or [commercial concern], namely:—
(i) Financial leasing services including equipment leasing and hire-purchase;
[Explanation.—For the purposes of this item, “financial leasing” means a lease transaction where—
(i) contract for lease is entered into between two parties for leasing of a specific asset;
(ii) such contract is for use and occupation of the asset by the lessee;
(iii) the lease payment is calculated so as to cover the full cost of the asset together with the interest charges; and
(iv) the lessee is entitled to own, or has the option to own, the asset at the end of the lease period after making the lease payment;]
(ii) (Omitted by Finance Act, 2006 w.e.f. 1.5.2006);
(iii) Merchant banking services;
(iv) Securities and foreign exchange (forex) broking; and purchase or sale of foreign currency including money changing;
(v) Asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services;
(vi) Advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy;
(vii) Provision and transfer of information and data processing;
(viii) Banker to an issue services
(ix) Other financial services namely, lending; issue of pay order, demand draft, cheque, letter of credit and bill of exchange; transfer of money including telegraphic transfer, mail transfer and electronic transfer, providing bank guarantee, overdraft facility, bill discounting facility, safe deposit locker, safe vaults; operation of bank accounts.
(b) Foreign exchange broking and purchase or sale of foreign currency, including money changing provided by a foreign exchange broker or an authorized dealer in foreign exchange or an authorized money changer, other than those covered under sub-clause (a)
CAclubindia
