Seeks to amend exemption notification No. 25/2012-ST dated 20.06.2012 so as to exempt services by an acquiring bank, to any person in relation to settlement of an amount upto two thousand rupees in a single transaction transacted through credit card, debit card, charge card or other payment card service

Government waives service tax charged while making payments through credit card, debit card, charge card or any other payment card; waiver limited to payments up to Rs. 2,000 in a single transaction

When a customer uses a credit card, debit card, charge card or any other payment card for payment of his purchase of goods or services, the merchant/service establishment is charged certain merchant discount rate (MDR) by credit card or debit card issuing banks. With a view to promote digital transactions and encourage merchant establishments to accept such card payments, Government has waived service tax on such amount charged while making payments though credit card, debit card, charge card or any other payment card. However, this waiver is limited to payments upto two thousand rupees only (Rs.2000) in a single transaction.

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

NOTIFICATION

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No. 52/2016-Service Tax

New Delhi, the 8th December, 2016

G.S.R. 1122(E).-In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), the Central Government being satisfied that it is necessary in the public interest so to do, hereby makes the following further amendments in the notification of the Government of India in the Ministry of Finance (Department of Revenue) No. 25/2012-Service Tax, dated the 20thJune, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20thJune, 2012, namely:-

In the said notification, in the opening paragraph, after entry 63, the following entry shall be inserted, namely,-

“64. Services by an acquiring bank, to any person in relation to settlement of an amount upto two thousand rupees in a single transaction transacted through credit card, debit card, charge card or other payment card service.

Explanation. — For the purposes of this entry, “acquiring bank” means any banking company, financial institution including non-banking financial company or any other person, who makes the payment to any person who accepts such card.”

[F. No. 356/21/2016-TRU]

(Anurag Sehgal)

Under Secretary to the Government of India

Note:-The principal notification was published in the Gazette of India, Extraordinary, vide notification No. 25/2012 – Service Tax, dated the 20th June, 2012, vide number G.S.R. 467 (E), dated the 20thJune, 2012 and last amended vide notification number 47/2016 – Service Tax, dated the 9th November, 2016 vide number G.S.R. 1056 (E), dated the 9th November, 2016.

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Posted Under

Category : Service Tax (3286)
Type : Featured (4133) Notifications (15277) Notifications/Circulars (30302)

6 responses to “Upto Rs. 2000 Payment no Service tax on Debit/ Credit card merchant discount”

  1. HL Arora says:

    I do agree that most of the developers in real estate don’t keep swipe machine that no notification is received by them from GOI regarding the Notification that ”No service is to be levied if the maint to developer is less than Rs. 2000/-”
    So I understand that on this notification GOI must clarify in bold letter in print as well as electronic media.

  2. Siyad says:

    Sir/Madam
    Can you please confirm , the above exemption is applicable for ATM transactions?

  3. Manoj Menon says:

    I think there is still a confusion on if this is implemented? Looks like no vendor/merchant is even aware of this move? or are they feigning ignorance?

  4. Pankaj says:

    When would it be implemented? I guess it is just an announcement as of now? Also will the bill be generated only for the payable amount in such a scenario or it will be in a cash back form?

  5. Suneel Sharma says:

    1) Services by an acquiring bank, to any person in relation to settlement of an amount upto two thousand rupees in a single transaction transacted through credit card, debit card, charge card or other payment card service – It seems that Wallet transactions and Netbanking transactions have been excluded from the exemption
    2) Whether, the exemption applies to online transactions is not clear

  6. Parveen says:

    Hi,

    what it mean?
    “who makes the payment to any person,who accepts such a card”…..in last para of article above

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