Interest on loans

[sunil mehta]

As per Rule 6(2)of Service Tax (Determination of Value) Rules, 2006, 'Interest on loans' is excluded from the value of taxable services.But notfn.no.29/2004 dt.22/9/2004 says that'Taxable services shall be exempt in relation to (a) overdraft facility (b) cash credit facility (c) discounting of bills, bill of exchange or cheques as is equivalent to the amount of interest on such overdraft, cash credit or, as the case may be, discount from the service tax. Whether for the purpose of  CC Rule,Rule 6(3), int.on loans on OD facility,cash credit facility will be inluded in the value of 'exempted services'in the formulae(as it is exempted by notfn.)? Or whether the interest on ALL loans will be not taken totally in 6(3)formulae as int. on loans is excluded by Valuation Rules? Which will prevail?-Notnf. no.29/2004 or valuation rules?

AI Summary

Debate on Including Loan Interest in Exempted Services Calculation Under Rule 6(3) of Cenvat Credit Rules A discussion on a forum addresses whether interest on loans should be included in the calculation of exempted services under Rule 6(3) of the Cenvat Credit Rules (CCR). The initial query questions if interest on loans, overdraft, and cash credit facilities, which are exempted by notification, should be included in the exempted services formula. One response clarifies that interest on loans is excluded from taxable value by rules, but overdraft and cash credit values should be included in Rule 6(3) calculations. Another response suggests that valuation rules are irrelevant for Cenvat Credit, and exemptions should be considered under Rule 6. A third response questions if interest qualifies as a service.