Financial Daily from THE HINDU group of publications
Monday, Apr 24, 2006
Financial Daily from THE HINDU group of publications Monday, Apr 24, 2006 |
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Mentor
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Taxation Columns - At Your Service Risk advice
Document verification
We are providing services to HDFC Bank Ltd. We have the RCU (risk containment unit) agency of the bank for the Andhra Pradesh region and the scope of work includes document verification of salary certificates, salary slips, bank statements, etc., and profile check of customers for loan products such as home and auto loans. Such work helps the bank take decisions on loan approval,and we are not the final authority. All the decisions regarding loan approval are taken by the bank. Are such services liable to service tax? We provide such services as a partnership firm. Will it make any difference if we provide these as a proprietorship firm? Rajiv M., e-mail The aforesaid services shall be covered under business auxiliary services, defined by Section 65 (19). This includes: A service incidental or auxiliary to sub-clauses (i) to (vi), such as billing, issue or collection or recovery of cheques, payment, maintenance of accounts and remittance, inventory management, evaluation or development of prospective customer or vendor, public relation services, management or supervision, and includes services as a commission agent, but does not include any information technology service and any activity that amounts to manufacture within the meaning of clause (f) of Section 2 of the Central Excise Act, 1944. Further, the taxability would arise only if the service provider is a commercial concern. Hence, it will not make any difference in taxability due to change in the status of the partnership firm to proprietorship firm, as both are commercial concerns. However, as per the Finance Act, 2006, it shall be a taxable service irrespective of the status of service provider. Thus, even an individual shall be covered.
Send in your queries on service tax, excise and Customs to MentorAtYourService@gmail.com
Sanjiv Agarwal
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