https://www.taxtmi.com/article/detailed?id=121 Prepayment and analogous bank charges are characterised as damages, compensation or interest like payments for early termination or non utilisation of credit facilities, not as payment for any service rendered. Such charges that substitute for lost interest or compensate for redeployment risk partake the character of interest and, under the Service Tax (Determination of Value) Rules, should be excluded from the taxable value of services. Processing fees may include a taxable service element but require apportionment to separate genuine service charges from interest like collections. A revenue circular treating pre closure charges as taxable service consideration is criticised as inconsistent with these principles. en-us Sat, 26 Jul 2008 00:00:00 +0530 Fri, 06 Mar 2009 18:53:03 +0530 TaxTMI RSS Generator https://www.taxtmi.com/article/detailed?id=121 Prepayment and analogous bank charges are characterised as damages, compensation or interest like payments for early termination or non utilisation of credit facilities, not as payment for any service rendered. Such charges that substitute for lost interest or compensate for redeployment risk partake the character of interest and, under the Service Tax (Determination of Value) Rules, should be excluded from the taxable value of services. Processing fees may include a taxable service element but require apportionment to separate genuine service charges from interest like collections. A revenue circular treating pre closure charges as taxable service consideration is criticised as inconsistent with these principles. Articles Service Tax Sat, 26 Jul 2008 00:00:00 +0530 https://www.taxtmi.com/article/detailed?id=121