1. Service tax authorities, of late, have been issuing notices to various borrowers of External Commercial Borrowings (ECB’s) from foreign branches of Indian banks and holding them liable to pay <a rel=”nofollow” onclick=”javascript:pageTracker._trackPageview(‘/outgoing/article_exit_link’);” href=”http://www.taxmann.net/STOnlineWeb/NewHomePage/Home.aspx?pId=160″>Service tax</a> from September 10, 2004 under section 65(12)(a)(ix) of the Finance Act, 1994 which covers ECBs.

According to the borrower, the responsibility of paying service tax is of the service provider which is the foreign branch of the Indian bank and, hence, the Indian bank having a permanent establishment in India, is supposed to pay and not the borrower.

The contention of the service tax authorities is partially correct after coming into effect of section 66A of the Finance Act, 1994 from April 18, 2006.

Until the coming into effect of section 66A, the liability and obligation to pay service tax was that of Indian bank and not that of the borrower. Contrary to the contention of the service tax authorities, even under rule 2(1)(d)(iv) of the said Rules, effective from August 16, 2002 and June 16, 2005 respectively, the borrower cannot be made liable for the payment of service tax.

2. Rule 2(1)(d)(iv) reads as follows :—

‘Person liable for paying the service tax’ means,—

(iv) in relation to any taxable service provided or to be provided by a person, who has established a business or has a fixed establishment from which the service is provided or to be provided, or has his permanent address or usual place of residence, in a country other than India, and such service provider does not have any office in India, the person who receives such service and has his place of business, fixed establishment, permanent address or, as the case may be, usual place of residence, in India.”

From the aforesaid provisions, it would be clear that until April 18, 2006, the requirement under rule 2(1)(d)(iv) was that only in case where the service provider did not have any office in India, the person receiving taxable service was liable for paying service tax involved. In the cited case, the Indian Bank having its registered and head office in India, and a branch in a foreign country cannot be said to be a service provider who did not have an office in India.

After coming into effect of section 66A, rule 2(1)(d)(iv), substituted with effect from April 18, 2006 by the Service Tax (Second Amendment) Rules, 2006, reads as follows :—

“‘Person liable for paying the service tax’ means -

(iv) in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service;”

As such, until April 17, 2006, the borrower was not a ‘person liable for paying service tax’ within the meaning of the Act and the said Rules, including rule 2(1)(d)(iv) thereof.

It is relevant to note herein that the phrase ‘does not have any office in India’, in rule 2(1)(d)(iv), stands omitted from the substituted rule. As such, with effect from April 18, 2006, in any case where the taxable service is provided or is to be provided by either a person who has established a business in a country other than India or has a fixed establishment from which the service is provided or is to be provided in a country other than India or has his permanent place or usual place of residence in a country other than India, the service recipient in India would be treated as if it has itself provided the service in India and, accordingly, it would be liable to pay the service tax and comply with all procedural and other requirements as specified in the Act and the said Rules. The respective clauses in section 66A (1) (a) are disjunctive and, hence, once any of the three alternatives contained therein are satisfied, the service recipient becomes liable to pay service tax on the taxable service involved.

Applying the aforesaid provision, since the service is being provided by foreign branch of an Indian Bank, the condition precedent laid down in section 66A(1)(a) is satisfied and, in the absence of the phrase ‘does not have any office in India’ in rule 2(1)(d)(iv), as recipient of the services, the borrowers would be liable to make payment of the service tax payable on the ‘Banking and Other Financial Services’.

3. The fees paid or to be paid are liable to service tax under ‘Banking and Other Financial Services’ under the Act with effect from September 10, 2004. The liability to pay service tax for the period prior to April 18, 2006 would be that of Indian Bank and on and from April 18, 2006, would be that of the borrowers.

A bank levy by the IRS is brought down on folks to reclaim the absolute sum of money owed, while adjusting the sum of money to the tax due. When you neglect to pay your taxes even after you’ve been dished out a lawful notification, your bank will recuperate the amount from your current account and return it to the IRS. In case your account has depleted monetary fund to address your debt to the IRS, your bank holds the right to freeze out your account and regain the full sum. This procedure is known as a bank levy. Put differently, a bank levy is enforced on you coming after your unfitness to answer to the notice and pay off the undischarged taxes to the IRS within twenty-one days.

The bank account can be about whatever type of account (e.g. savings, current, etc) and while most levies happen in the United States, the IRS or a different creditor can occasionally go after off shore accounts. Once a bank levy is brought in on your account, whatever money that is in the account will be confiscated. If there is not adequate profit in the account, the whole amount will be abstracted and your account will generally stay frozen till the debt is compensated.

Just in case you are incapable to make up your debts promptly, the tax section bears the right to pioneer lawful action against you by enforcing a bank levy on your current account. A bank levy can be crushing, causing average daily living inconceivable. If you incur a notice of a bank levy from the IRS, you are required to act promptly. Once you obtain the “intent to levy” letter, you must act promptly if you mean to block off the procedure.

It ought to be remarked that a bank levy can come about quite often and it’s not a one time case. A creditor can petition a bank levy as numerous times as he prefers to until the debt is compensated. A lot of banks penalize their customers if their bank account obtains a levy. It had better be noted that any checks that have been published before the event that have not been cashed in will bounce, since your account is frozen. It should also be noted that withdrawals can’t come about, but in most situations, deposits can happen. So if you’ve obtained a bank levy and have your employer situate income into your account, this income will be seized also.

Undertaking to talk terms with the IRS on your own can head to magnified penalizations and fines, added financial strain, and lost chances. You need the help that Instant Tax Solutions can provide. Let Instant Tax Solutions alleviate your tension and assist you recover financial freedom!

Bank account garnishment
Tax relief

A levy is an administrative processes made by an entity (such as the government) against an individual because the person in question has a financial obligation (i.e. owes something). In terms of taxes, a levy is a process brought by the IRS against a person who is late, or delinquent, in their taxes. A levy leaves the agency to capture any holdings they can in order to pay the financial obligation.

The IRS has a lot of immense and discretionary ability to deal with tax infringements. Masses in the U.S. are anticipated to compensate taxes, and when the IRS finds out, there is nothing but trouble in that aspect. A tax levy allows the IRS to place levies and assume belongings without going to court. Application of power does not require a court order – although the court does eventually become involved if in that respect appears an appeal or complaint.

With a tax levy, the IRS can gain out into a person’s bank account, wages, savings accounts, retirement fund, Social Security defrayments, and even belongings. This is a divine instrument that the IRS has to cut tax evasion. One great thing is that the common taxpayer will never have to concern about a tax levy, since they usually pay whenever the IRS first notifies to them of late taxes.

Shortly after you have been notified that a tax levy is being filed against you, you should hire a lawyer. The IRS must give notice to you within a certain amount of time before beginning to confiscate your assets. Preferably, you should employ a Tax Attorney. These people have interacted with the IRS before on various occasions and can pass you through the procedure measure by measure.

What your tax attorney will likely do first is review all of your financial statements. Therefore, it is important to keep detailed records of your financial proceedings. If there is a discrepancy, then the lawyer can register a motion to terminate on your behalf to have the levy lifted. The other thing the tax attorney can do if you cannot afford to pay the full amount is raise an offer in compromise to the IRS, offering to pay some of the amount of money but not all due to your inability to pay. The IRS is actually consensual to these propositions, provided you can raise your cause.

Tax relief scams

IRS TAX LEVY

An IRS tax levy is a lawful seizure of your property/holdings to fulfill an IRS tax debt. Tax levies are dissimilar from liens. A tax lien is a claim applied as security for the tax debt, while a tax levy in reality claims the property to fulfill the debt. A levy is an administrative execution claimed by an entity (such as the authorities) versus an individual because the individual at issue has a financial obligation (i.e. Owes something). In tax terms, a levy is a legal action made by the Internal Revenue Service versus an individual who is late, or neglectful, in their tax payment. A levy grants the bureau to seize any property they can in order to compensate the debt.

The major types of levies are:

WAGE LEVY

The most common types are wage garnishments; this is the process of subtracting revenue from an employee’s monetary compensation including salary.

Wage garnishment can negatively affect the ability to receive a loan or open a bank account, credit, and personal reputation of the individual.

BANK LEVY

A bank levy is when your bank account is frozen and all or part of the funds in your bank account is confiscated. Bank levies can happen for many reasons; however the two more common are because of unpaid taxes and unpaid debt.

Your bank is compelled to freeze all the revenue in your account(s) up to the sum of money of the levy (that’s the grand total of everything you owe IRS) for 21 days. Then, if the IRS has not issued a Bank Levy acquittance, your bank must commit that revenue to IRS.

The dependable folks at Instant Tax Solutions have made the information easy for people to understand are here to help conquering tax levy. Instant Tax Solutions can stand for you in IRS negotiations, adjudicating your wage garnishment issues, and bringing your tax troubles to a close. We have a superior success rate in the acquittance of wage garnishments. It’s really likely we’ll be capable to have the garnishment discharged before your succeeding payroll check.

Bank account garnished Tax relief scams

According to the borrower, the responsibility of paying service tax is of the service provider which is the foreign branch of the Indian bank and, hence, the Indian bank having a permanent establishment in India, is supposed to pay and not the borrower.

The contention of the service tax authorities is partially correct after coming into effect of section 66A of the Finance Act, 1994 from April 18, 2006.

Until the coming into effect of section 66A, the liability and obligation to pay service tax was that of Indian bank and not that of the borrower. Contrary to the contention of the service tax authorities, even under rule 2(1)(d)(iv) of the said Rules, effective from August 16, 2002 and June 16, 2005 respectively, the borrower cannot be made liable for the payment of service tax.

2. Rule 2(1)(d)(iv) reads as follows :—

‘Person liable for paying the service tax’ means,—

(iv) in relation to any taxable service provided or to be provided by a person, who has established a business or has a fixed establishment from which the service is provided or to be provided, or has his permanent address or usual place of residence, in a country other than India, and such service provider does not have any office in India, the person who receives such service and has his place of business, fixed establishment, permanent address or, as the case may be, usual place of residence, in India.”

From the aforesaid provisions, it would be clear that until April 18, 2006, the requirement under rule 2(1)(d)(iv) was that only in case where the service provider did not have any office in India, the person receiving taxable service was liable for paying service tax involved. In the cited case, the Indian Bank having its registered and head office in India, and a branch in a foreign country cannot be said to be a service provider who did not have an office in India.

After coming into effect of section 66A, rule 2(1)(d)(iv), substituted with effect from April 18, 2006 by the Service Tax (Second Amendment) Rules, 2006, reads as follows :—

“‘Person liable for paying the service tax’ means -

(iv) in relation to any taxable service provided or to be provided by any person from a country other than India and received by any person in India under section 66A of the Act, the recipient of such service;”

As such, until April 17, 2006, the borrower was not a ‘person liable for paying service tax’ within the meaning of the Act and the said Rules, including rule 2(1)(d)(iv) thereof.

It is relevant to note herein that the phrase ‘does not have any office in India’, in rule 2(1)(d)(iv), stands omitted from the substituted rule. As such, with effect from April 18, 2006, in any case where the taxable service is provided or is to be provided by either a person who has established a business in a country other than India or has a fixed establishment from which the service is provided or is to be provided in a country other than India or has his permanent place or usual place of residence in a country other than India, the service recipient in India would be treated as if it has itself provided the service in India and, accordingly, it would be liable to pay the service tax and comply with all procedural and other requirements as specified in the Act and the said Rules. The respective clauses in section 66A (1) (a) are disjunctive and, hence, once any of the three alternatives contained therein are satisfied, the service recipient becomes liable to pay service tax on the taxable service involved.

Applying the aforesaid provision, since the service is being provided by foreign branch of an Indian Bank, the condition precedent laid down in section 66A(1)(a) is satisfied and, in the absence of the phrase ‘does not have any office in India’ in rule 2(1)(d)(iv), as recipient of the services, the borrowers would be liable to make payment of the service tax payable on the ‘Banking and Other Financial Services’.

3. The fees paid or to be paid are liable to service tax under ‘Banking and Other Financial Services’ under the Act with effect from September 10, 2004. The liability to pay service tax for the period prior to April 18, 2006 would be that of Indian Bank and on and from April 18, 2006, would be that of the borrowers.