Service tax applicability on co operative banks

Dear Sowmya,

There is no specific exemption granted to Co-Operative Banks under Service Tax Law.

Hence, whatever charges are collected such as bank charges/locker rent etc. are liable to Service tax. However, interest collected on the amount given on loan is not liable to Service tax, as the same is covered under the negative list of services under Section 66D of the Finance Act, 1994.

Thirdly, you should also note that while claiming Cenvat credit, the banks need to refer to Rule 6(3B) of the Cenvat Credit Rules, 2004, which prescribes that the banks should reverse 50% of the Cenvat credit availed.

Please let me know for any further clarification required in this respect.