Service tax on interest

712 views

Save Share

Arvind Sharma

ACA

1090 Points Posted on 01 February 2013

Hello Everyone,

I was reading Terms & Conditions of a Bank for Credit Card... I found that Service Tax will be levied on Interest Charges on late payment.

Is it valid..?? I mean, interest on late payment is of a penal nature, that means there is no service at all, but a penalty imposition. So, when there is no service, then how can service tax be levid..??

Members, plz clerify

Reply awaited..

Replies (2)

Vaisakh Ayyappan Prakash(VAP)

student

326 Points Posted on 01 February 2013

hey act has provided a provision where institution can levy tax on penalties and interest if applicable.

you can check particular site for further information

hope it helps

https://www.servicetax.gov.in/st-profiles/paymntcards-services.htm

Arvind Sharma

ACA

1090 Points Posted on 01 February 2013

Ok.. I checked it. Also refer valuation rules. but still I am not in that favour.. You can also check Telephone bills, where they charge Rs 10 - 40 depending upon bill amount, i.e. penalty, but NO Service Tax on that amount.. So I can say no service tax is leviable on penalties..

and Interest on late payment is also of penalty nature.. So no interest should be charged on it.

Thats my view., I am looking for any judgement in favour or opposit.