Liability to pay service tax on upfront fees on external commercial borrowings

[Apurba Biswas]

Liability to pay service tax on upfront fees/processing fees paid to overseas bank (Foreign branch of ICICI Bank and State Bank of India) for sanction of external commercial borrowings(ECB) - Whether head office of ICICI Bank/SBI or recepient of ECB.

AI Summary

Liability for Service Tax on Upfront Fees for ECBs: Recipient in India Must Pay per Finance Act Rules. A discussion on the liability to pay service tax on upfront fees for external commercial borrowings (ECB) from foreign branches of Indian banks, such as ICICI Bank and State Bank of India, considered whether the tax obligation falls on the bank's head office or the ECB recipient. Contributors agreed that such fees are categorized as an import of services. Consequently, the recipient of the ECB in India is liable to register and pay the service tax, as foreign branches are treated as separate entities under the Finance Act.