Arvind Sharma (ACA) (1432 Points)
01 February 2013Hello 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..
Vaisakh Ayyappan Prakash(VAP)
(student)
(474 Points)
Replied 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)
(1432 Points)
Replied 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.
CAclubindia
