Service Tax is chargeable on services provided by Chit Funds? - Professionals - Taxation - TIK Share
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Service Tax is chargeable on services provided by Chit Funds?


Rahul Rai

2014-03-11

Is service tax payable on chit fund services?

Vedanta Deshika

2014-03-11

The Supreme court in a recent case of Union of India Vs. Delhi Chit Fund Association [(2014) 42 taxmann.com 52 (SC)] has upheld the Delhi HC jugdement where it was decided that 

"Chit fund business constitutes ‘transaction in money’ and hence not liable to service tax as per section Section 65B(44) of the Finance Act"

The word 'Service' which is defined u/s 65B(44) is reproduced below

"Service" means any activity carried out by a person for another for consideration, and includes a declared service, but shall not include—

 

(a) an activity which constitutes merely,––

(i) ..................................................................

(ii) …...............................................................

(iii) a transaction in money or actionable claim”

 

 CBEC vide Entry No. 8 of the Notif No 26/ 2012-ST provided that 70% of Gross amount is chargeable to Service tax for Services provided in relation to Chit with certain conditions.

The above Entry has now been quashed by the Delhi HC and upheld by SC

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