Service tax credit for nbfc distributor of mutual fund

Hi

Our company is NBFC which is distributor of mutual funds (Main Activity of the company),  and service tax is payable by AMC as reverse charge is applicable on the mutual fund distributors.

The Company is also providing the services of distribution of other financial products like PMS, fixed deposits, etc. No reverse charge mechanism is applicable for such services and the company is depositing service tax on such taxable output services provided by it.

My query is that whether rule 6(3b) is applicable in this case?

whether company is liable to pay 50% of service tax credit?

Please share your views on this.

Regards

 

 

Replies (5)

(vii) Rule 6(3B) – Notwithstanding anything contained in sub-rules (1), (2) and (3), a banking company and a financial institution including a non-banking financial company, engaged in providing services by way of extending deposits, loans or advances shall pay for every month an amount equal to fifty percent of the CENVAT credit availed on inputs and input services in that month.

our company is NBFC But not engaged in providing services by way of extending deposits, loans or advances

Rule 6B is still applicable or not....pls clarify

 

Rule 6(3B) of CCR provides for payment of 50% of input tax credit availed. Are you availing any input tax credit? (because you say RCM is applicable). If yes, then, as I understand, it is applicable for ND-NBFC too, as such difference (deposit accepting or not) is not made.

But it is stated in rule 6(3B) that NBFC, engaged in providing services by way of extending deposits, loans or advances.

and our company is Non deposit taking NBFC, can we interperate it as 50% credit reversal is applicable for deposit taking NBFC only??? 

This is the extract of relavant provisions. Where is it mentioned as engaged in providing services by way of extending deposits, loans or advances?

Rule 6(3b): ‘(3B) Notwithstanding anything contained in sub-rules (1), (2) and (3), a banking company and a financial institution including a non-banking financial company, providing taxable service specified in sub-clause (zm) of clause (105) of section 65 of the Finance Act, shall pay for every month an amount equal to fifty per cent of the CENVAT credit availed on inputs and input services in that month.

Sec 65(105)(zm): zm) 12[to any person], by a banking company or a financial institution including a non-banking financial company or any other body corporate 13[or commercial concern], in relation to banking and other financial services;]

 

 

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