Courier Service Vis a Vis Banking & Financial Servuce

CA Shilpi Jain (Indirect taxation) (155 Points)
Replied 12 October 2009

The limit for SSI is 10 lacs and not 8 lacs. If your client will have centralised accounting then centralised registration can be opted for mentioning the other branches that need to be registered. In that case one return will suffice from the head office. Else registration for each premises has to be done.

Payment of ST is quarterly by the 5th of the month following the quater. Returns have to be dilled only quarterly.

Courier services will not apply as your client will not be providing courier agency service as mentioned in the Act ie, delivery of time sensitive goods, documents and articles.

Laxmi Mittal (Practice) (188 Points)
Replied 12 October 2009

Thanks for your reply for guiding that the Service Tax payment limit to an S.S.I. is Rs. 10 lac & not basic exemption limit of Rs. 8 lac as prescribed.

Pl. reconfirm as we are not talking of Excise but Service Tax basic exemption pl. ?

Also as stated by you that Category of Courier Service will not be applicable ,then which category of Service Tax for S.Tax registration will be applicable?

We do not want to attract Banking & Financial Service, clause 65(105) (zm) of Service Tax Act as it will involve permission from R.B.I.

Also pl. highlight on issues raised by us like

The foremost question is, in a day how much maximum cash can be deposited in a Bank to avoid attracting Banking & Financial Service, clause 65(105) (zm) of Service Tax Act. What is the safer limit for the quantum of doing business thru banking channels for not attracting above?

Proper records will be maintained for the cash receipt/ payment at any place having name, address. Is there any cap on making pucca/ accountable receipt/ payment under Income Tax Act / safer limit of quantum of each receipt for showing in the books so that the Income Tax enquiry is not faced in the case of cash receiver / depositor?

Tax Audit under I.T. Act U/s 44AB will be applicable only if the commission receipt exceeds Rs. 40 lac in a financial year. ?????

Thanks!

CA Laxmi Mittal

CA Shilpi Jain (Indirect taxation) (155 Points)
Replied 12 October 2009

I am talking about ST exemption only. ED exemption is Rs.1.5 crores.

And if u take registration under banking and financial services (because u r providing cash management services as understood from the operations that you have mentioned) u need not get permission from RBI. Atleast I am not aware of such thing.

There is no daily limit on how much cash u shd deposit and all fir ST. Only a yearly limit of 10 lacs is given.

I am not sure of the IT provisions. Probably if u post in the Income tax category of this site u will get proper answer.

Laxmi Mittal (Practice) (188 Points)
Replied 12 October 2009

Thanks for your guidence

Laxmi Mittal

Dilip Darji (392 Points)
Replied 13 October 2009

Hello Sirs.

CA Shilpi Jain has given very correct reply.

I would add only one thing is that, if your client is an individual or proprietary firm or partnership firm, than only payment of Service Tax to be made on quarterly basis, otherwise on monthly basis.(Proviso Rule 6 (1) of Service Tax Ruiles, 1994).

Sunil (Trader) (2611 Points)
Replied 14 October 2009

Cash Management Services has to be licensed if banking Channels are used. Here you are talking about collecting cash at one city, depositing in bank, drawing out cash in another city and delivering. Cash Management Services are strictly movement of Physical Cash like filling Bank ATMs etc. or collecting cash from account holders premises to be deposited into the account holders bank account.

In this case, they want to collect cash from maybe a known or an unknown person and deposit in Bank Account and draw out again and deliver to another person, maybe a known or an unknown person. This is similar to a Western Union Money Transfer and Western Union is subject to a lot of controls for AML procedures. Therefore it is better to look at RBI before venturing into this business.

FYI, cash management services used by banks have to be approved by RBI especially those handling the treasury operations that are Bank's account with RBI. If there is Cash in bank's treasury vault, it is the bank's balance with RBI. Therefore RBI nod is required on whom you use for such management. If cash is handled from an account holder's premises, it is still account holder's cash until the deposit is counted and confirmed by the bank cashier. Then the account holder's account is credited by the bank and RBI is debited. After that the entire management has to be done with RBI in mind. Therefore you find umpteen number of cash management services for collecting cash from customer's premises but very few of them are transporting cash between branches and ATMs.

Sunil (Trader) (2611 Points)
Replied 14 October 2009

The service CA laxmi Mittal is talking about is Money Transfer Service or Remittance Service (in cash). That is under the Ambit of Banking Regulations Act and permission of RBI is required. It is not a Cash Management Service.

annie (none) (22 Points)
Replied 15 February 2011

Hello everyone...I am new member to this forum and i have no any idea about this forum.Please anyone can provide me complete information about the courier service.

courier service