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.

[Surender Gupta]

This issue seems to be related to Import of Services. Various factors contribute in deciding what is import and what is not. Apparently, the service described in the query may be treated as Import of Service.

[Guest]

Service provider in this case is a foreign branch of the bank which is considered as a separate person for the purpose of service tax as per Sec.66A of Finance Act. Thus the iability to pay tax would not fall on either overseas Branch of the Bank who rendered the service nor on its HO in India, which is a separate person for the purpose of Act. On the other hand, the same would fall under 'import of service' and thus the person receiving the service in India would be liable to register/pay service tax on the service received.

[NARESH SAINI]

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.