SERVICE TAX ON NBFC

[Asked by Guest]

DEAR SIR

One of my client is running a NBFC, he is having income from Interest from loan/ hypothecation   transactions, does it chargeable to service tax under banking and financial services or not.

[Madhukar N Hiregange]

On interest there is no liability. Other incomes maybe subjected to ST

[YAGAY and SUN]

Dear Nitin,

Earning interest is not treated at par with providing/receiving services, therefore, no service tax would be leviable.

Regards

Team YAGAY & SUN

(Management & Indirect Taxation Consultants)

AI Summary

Interest income not treated as service, so not subject to service tax; non-interest NBFC receipts may be taxable.
Interest income from lending or hypothecation by a non-banking financial company is not treated as the provision of a service for service tax purposes and therefore is not subject to service tax; other receipts such as fees, commissions or ancillary non-interest incomes may constitute taxable financial services and should be assessed separately for service tax liability.