Retail Electronic Payment Systems – NEFT / NECS / RECS / ECS – Levy of Processing Charges by Clearing Houses – Service Tax to be paid by Banks
RBI instructs that for the charges payable for electronic transfer of funds between banks, the charges payable by the originating banks to destination banks (including the service tax applicable thereon) will be calculated and settled by the Clearing Houses using the multilateral netting method. However, the service tax will be calculated on gross obligations of the banks. Necessary MIS reports will be provided to the banks to enable them to remit the service tax to the Government. Will the Service Tax Department agree or will the Clearing Houses be asked to pay the Service Tax?