Tax net may get wider for credit card services
The Central Board of Excise and Customs is examining the possibility of making a case for charging service tax with retrospective effect from 2001 on "service charges" and "commissions" received by banks on services rendered in relation to credit cards.
According to officials, several banks including American Express, SBI, Standard Chartered, ICICI and HSBC could come under the scanner of the revenue department regarding the collection of such charges.
The argument of the department is that service charges recovered by the banks on account of swiping of credit cards and commissions received by the visa or master cards or the card issuing bank fall in the category of services.
These are, therefore, amenable to service tax under the category of "banking and financial services" with effect from July 2001, they said.
The Indian Banks' Association has already expressed to the government its opposition to the proposal.
"Technically, this is a sort of funding arrangement with merchant establishments. Besides, this was not mentioned in the coverage of service tax at the time the circular was issued by the government. It is not a fee that banks are receiving during their dealings with customers," sources said.
So, next time when you pay service charge for swiping your credit card, you might face an additional charge of 10.2 % towards service tax.
Thursday, December 29, 2005
Friday, December 23, 2005
Non-acceptance of Small Coins is an offence: clarifies RBI
The Reserve Bank of India has come across reports that banks are reluctant to accept 50 paise and 25 paise coins.
A recent study conducted by the Reserve Bank through the Birla Institute of Technology (BITS), Pilani also suggests that similar reluctance is exhibited by shopkeepers and traders.
The Reserve Bank of India states categorically that all small denomination coins including those of 50 paise and 25 paise coins are legal tender and non-acceptance of any such coins is an offence.
The Reserve Bank has advised all banks to desist from any such restrictive practice. Members of public should assert their right to get appropriate change and acceptance of all denomination coins by banks in exchange.
The Reserve Bank of India has come across reports that banks are reluctant to accept 50 paise and 25 paise coins.
A recent study conducted by the Reserve Bank through the Birla Institute of Technology (BITS), Pilani also suggests that similar reluctance is exhibited by shopkeepers and traders.
The Reserve Bank of India states categorically that all small denomination coins including those of 50 paise and 25 paise coins are legal tender and non-acceptance of any such coins is an offence.
The Reserve Bank has advised all banks to desist from any such restrictive practice. Members of public should assert their right to get appropriate change and acceptance of all denomination coins by banks in exchange.
Search engines selling ad space may be taxed
The Authority for Advance Rulings has said that Google Online India Pvt Ltd, a wholly owned subsidiary of US-based Google International LLC, will have to pay service tax for selling advertisement space on its search site to Indian entities.
This can set a precedent for search engines with offices in India falling in the ambit of the tax. The advance ruling last week noted that the proposed activity of Google India to sell space on its site tantamount to providing a service to advertisers and clients. "From this angle, the applicant will be covered by the definition of advertising agency," it said. When contacted, Google executives said they were still examining the ruling and did not wish to comment on it.
A ruling by the advance authority is binding on the company with immediate effect unless it decides to appeal against the verdict. The search engine had approached the Advance Ruling Authority in August this year, seeking clarifications on whether providing selling space for advertisement on the Google website would be exempt from service tax or was classifiable as advertisement service, computer network service, business auxiliary service or any other taxable service.
In its application, Google had said the service it proposed to provide did not attract service tax.
The Authority for Advance Rulings has said that Google Online India Pvt Ltd, a wholly owned subsidiary of US-based Google International LLC, will have to pay service tax for selling advertisement space on its search site to Indian entities.
This can set a precedent for search engines with offices in India falling in the ambit of the tax. The advance ruling last week noted that the proposed activity of Google India to sell space on its site tantamount to providing a service to advertisers and clients. "From this angle, the applicant will be covered by the definition of advertising agency," it said. When contacted, Google executives said they were still examining the ruling and did not wish to comment on it.
A ruling by the advance authority is binding on the company with immediate effect unless it decides to appeal against the verdict. The search engine had approached the Advance Ruling Authority in August this year, seeking clarifications on whether providing selling space for advertisement on the Google website would be exempt from service tax or was classifiable as advertisement service, computer network service, business auxiliary service or any other taxable service.
In its application, Google had said the service it proposed to provide did not attract service tax.
Friday, December 09, 2005
Provident Fund interest rate dropped from 9.50% to 8.50%
The approximately four crore subscribers of the Employees Provident Fund Organisation (EPFO) will have to undergo a loss of one percentage interest, compared to last year, on their provident fund deposits.
The Central Board of Trustees (CBT) of EPFO on 7-12-2005 finally announced a 8.50% interest for provident fund deposits for 2005-06, against last year's 9.50%. The Labour Minister, Mr K. Chandrasekhar Rao, who is the Chairman of the EPFO, said that, even for paying 8.50% interest, there would be a shortfall of Rs 370 crore.
The Minister said he will not seek Government support for raising this Rs 370 crore but will look at ways of generating resources internally.
Though dropping of rate by 1% is not acceptable, I feel 8.50% is still a reasonable return for a guaranteed investment like this. The concerned department should look at investing the monies in large guaranteed securities which yield more returns so that higher benefits can be passed on to the mass.
The approximately four crore subscribers of the Employees Provident Fund Organisation (EPFO) will have to undergo a loss of one percentage interest, compared to last year, on their provident fund deposits.
The Central Board of Trustees (CBT) of EPFO on 7-12-2005 finally announced a 8.50% interest for provident fund deposits for 2005-06, against last year's 9.50%. The Labour Minister, Mr K. Chandrasekhar Rao, who is the Chairman of the EPFO, said that, even for paying 8.50% interest, there would be a shortfall of Rs 370 crore.
The Minister said he will not seek Government support for raising this Rs 370 crore but will look at ways of generating resources internally.
Though dropping of rate by 1% is not acceptable, I feel 8.50% is still a reasonable return for a guaranteed investment like this. The concerned department should look at investing the monies in large guaranteed securities which yield more returns so that higher benefits can be passed on to the mass.
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