Service Tax on bank charges deducted by intermidiary Bank

This query is : Resolved

CA Hemraj Zambauliker (Querist)
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16 March 2009 Assessee is a exporter, who receives remittance in foreign currency from the overseas customers. the remittance received is after deducting negotiating charges involved. Is service tax liability will be attracted on this charges. And that too receiver of these services ids liable for paying service tax. secondly if the service receiver pays the service tax to govt. can he avail credit against the same towards paying his excise liability

Dayal

Dayal (Expert)
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23 March 2009 Banking and financial charges are levied by bank on the inward remittance or negotiating charges, whatever you may address these charges as.

The bank is bound to charge you service charges, which are applicable to service tax, as banks are registered under the said category of services.

The bank is supporting the inward remittance, and they have prefixed charges which are to be borne by the receiver.

Therefore service tax is chargeable by bank and payable by you, however you can take the Cenvat input credit as these expenses are in relation to business.