Hindustan Times 7th july,2006
THE GOVERNMENT on Tuesday clarified that the department of posts cannot levy any service tax on money orders, operation of savings accounts, issue of postal orders and other banking and financial services.
"The department of posts is not considered as a service provider similar to a bank or a financial institution and therefore such services provided by the department are not liable to service tax", the finance ministry said in a statement.
In a circular issued here, the ministry said that banking and financial services offered by the department of posts cannot be equated with those of private banking entities.
Private banking and financial entities are liable to pay service tax under under section 65(105)(zm) read with section 65(12) of the Finance Act, 1994.
