Applicability of service tax on interest on arrears charged

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Whether Interest on arreears charged to member by Cooperative Housing Society, comes within ambit of service tax and service tax payable on the same?

AI Summary

Interest on Overdue Payments by Housing Society Not Subject to Service Tax, Clarifies Query on Tax Provisions A query was raised regarding the applicability of service tax on interest charged on arrears by a Cooperative Housing Society. The response clarified that interest received on financial activities, including overdue payments, is not subject to service tax. The provisions indicate that once a payment becomes overdue and interest is charged, such interest cannot be taxed under service tax regulations.