Financial sector Services Covered in Negative List –
Services by way of –
(i) extending deposits, loans or advances insofar as the consideration is represented by way of interest or discount;
(ii) inter se sale or purchase of foreign currency amongst banks or authorized dealers of foreign exchange or amongst banks and such dealers;
What are the “services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount”?
Illustrations of such services are –
• Fixed deposits or saving deposits or any other such deposits in a bank for which return is received by way of interest.
• Providing a loan or over draft facility for in consideration for payment of interest.
• Mortgages or loans with a collateral security to the extent that the consideration for advancing such loans or advances are represented by way of interest.
• Corporate deposits to the extent that the consideration for advancing such loans or advances are represented by way of interest or discount.
If any service charges or administrative charges or entry charges are recovered in addition to interest on a loan, advance or a deposit would such charges be also a part of this negative list entry?
No. The services of loans, advances or deposits are exempt in so far as the consideration is represented by way of interest or discount. Any charges or amounts collected over and above the interest or discount amounts would represent taxable consideration.
To what extent is invoice discounting covered in the negative list entry?
Invoice discounting is covered only to the extent consideration is represented by way of discount.
Would services provided by banks or authorized dealers of foreign exchange by way of sale of foreign exchange to general public be covered in this entry?
No. This entry only covers sale and purchase of foreign exchange between banks or authorized dealers of foreign exchange or between banks and such dealers.
