Service tax on interest received on bank fd.

This query is : Open

Sunil (Querist)
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11 October 2012 The negative list indicates that transaction in money or giving money as advance or deposit for consideration of interest or discount is exempt. However, it is very silent on the consideration quantum of discount or interest received on the deposit.

Therefore if a proprietor who does services of 10 lakh and above and pays service tax on his services, does he also have to raise an invoice on the bank for interest received in his personal fixed deposits or saving bank account. Does the invoice have to be raised and service tax paid based on dates the bank credits interest to his account.

MOHAMMAD SALIM

MOHAMMAD SALIM (Expert)
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11 October 2012 As per Section 66D (i) inter alia interest on deposits is part of negative list therefore no service tax on intt on FDs.

Hope this would settle the issue... Thanks....