Dear all
anyone can let me know whether service tax credit can be allowed on interest charges by the bank on cash credit account ?
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Service tax credit on interest
Replies (4)
Dear Kamlesh,
Your bank charges assuming inclusive of Service Tax i.e.
If bank debited Rs.127/- as Bank Charges, then
=(127/110.3%) = 115.14 (Approx.)
so Rs.115/- is assessable value & balance amount treated as Service Tax Rs.12/-.
No credit will be allowed against Interest charges on CC account to the bank,
since the value of "interest" on loan or any type of advance is not determined as taxable while calculating service tax liability of the bank.
For bank Industry ,it never charge Service Tax on Interest , therfore no Service Tax credit as per my opinion
There is no service tax on interest. If bank has charged ST on interest, it is by mistake. Illegal tax may not qualify for cenvat credit.
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