Service Tax Not Separately Payable on Interchange Fee as Tax has been paid on Merchant Discount Rate: Supreme Court rules in Citibank Case

The Supreme Court has ruled that service tax is not separately payable on interchange fees as tax has already been paid on the merchant discount rate (MDR). This decision came in the case involving Citibank, where the court clarified that the MDR, which includes interchange fees, is subject to service tax, and therefore, no additional tax is required on the interchange fee component. The ruling provides clarity on the tax treatment of interchange fees and ensures that there is no double taxation on the same transaction. This decision is significant for the banking and financial services sector, providing a clear understanding of the tax implications of interchange fees.