TaxTMI 
TaxTMI 
My credit card issuer charging service tax on interest charged on loan taken, which shall be repaid in 6 EMI.
My question is that whether service tax is applicable on interest charged by credit card issuer or not?
Thanks in advance.
Sanjay Gupta
Service tax on interest charged
16 Nov 2015 
5 Replies 
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Guest 
Service tax on interest may be contested as loan interest or treated as taxable credit card service consideration.
The document presents two operative positions: interest on credit card EMIs may be treated as interest on a loan and thus not liable to service tax, while an alternative position (and the issuer's representation) treats EMI interest as part of the credit card service consideration and therefore taxable; penal or late payment charges are regarded as taxable as consideration for tolerating an act or situation. (AI Summary)
The document presents two operative positions: interest on credit card EMIs may be treated as interest on a loan and thus not liable to service tax, while an alternative position (and the issuer's representation) treats EMI interest as part of the credit card service consideration and therefore taxable; penal or late payment charges are regarded as taxable as consideration for tolerating an act or situation. (AI Summary)