Service Tax on postal services – Communications Minister clarifies

By Vijay Kumar

The Minister of State for Communications & Information Technology, Dr. Shakeel Ahmad, informed Parliament, that service tax has not been imposed on all postal services. It was initially introduced on the following postal services:

(i) Speed post and express parcel post

(ii) Banking and financial services run by Department of Posts

(iii) Postal Life Insurance and Rural Postal Life Insurance

(iv) Retail Post services rendered to non-government organisations/ individuals

Subsequently it has been decided by Ministry of Finance to withdraw service tax from Banking and financial services run by Department of Posts (such as money orders, operation of Savings accounts, issue of postal orders, etc.), through a circular dated 4.7.2006 The circular further clarified that service tax need not be recovered on money order. So service tax will now have no impact on cost of money orders, Dr. Ahmad said.