Service tax on Interest on Hypothecation

[satbir singhwahi]

A  NBFC is financing  Motorcycles , under hypothecation agreement , all income receipts are accounted as Interest income .Whether they are subject to service tax ?  As banks are exempt , so they should be.

AI Summary

NBFCs Must Pay Service Tax on Interest Income from Motorcycle Financing; Review Negative List and Mega Exemption Notification. A Non-Banking Financial Company (NBFC) inquired about the applicability of service tax on interest income from motorcycle financing under a hypothecation agreement. The query highlighted that banks are exempt from this tax and questioned if the same applied to NBFCs. The response clarified that unlike banks, NBFCs do not have an exemption from service tax on interest income. It was advised to review the Negative List and Mega Exemption Notification to determine the obligation to pay service tax.