SERVICE TAX REFUNDABLE SECURITY DEPOSITS

[CA SOHRABH JINDAL]

Dear all,

I want to know  whether service tax is payable on the interest free security deposits received by the assessee. my client is a club and the club receives interest free refundable security deposits from its members to safe guard the assets of the club and any type of future losses due to any member.

kindly reply.(if possible with some valid case law, notification, circular etc.)

 

thanx to all in advance.  

[YAGAY and SUN]

As per my opinion, security deposit cannot be treated as taxable amount as no services are being provided for this particular amount.

AI Summary

Service tax on refundable security deposits: refundable interest free deposits are not taxable where no service is provided.
Interest free refundable security deposits received by a club from members to safeguard assets and cover potential losses do not constitute consideration for a service and therefore are not taxable as service tax when no service is provided in return.