Service Tax waived on Merchant’s Charges for Card payments upto Rs. 2,000

Govt. has waived Service Tax on Charges collected by Banks from Merchants for accepting card payments upto Rs. 2,000 through credit card, debit card, charge card or any other payment card

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.

CBEC Notification No. 52/2016-Service Tax dt. 8 Dec. 2016 [F. No. 356/21/2016-TRU]

G.S.R.….(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 20th June, 2012, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 467 (E), dated the 20th June, 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.”

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