What are the specified services where the place of provision is the location of the service provider?
Following are the specified services where the place of provision is the location of the service provider:-
i) Services provided by a banking company, or a financial company, or a non-banking financial company to account holders;
ii) Online information and database access or retrieval services;
iii) Intermediary services;
iv) Service consisting of hiring of means of transport, up to a period of one month.
What is the meaning of “account holder”? Which accounts are not covered by this rule?
“Account” has been defined in the rules to mean an account which bears an interest to the depositor. Services provided to holders of demand deposits, term deposits, NRE (non-resident external) accounts and NRO (non-resident ordinary) accounts will be covered under this rule. Banking services provided to persons other than account holders will be covered under the main rule (Rule 3- location of receiver).
What are the services that are provided by a banking company to an account holder (holder of an account bearing interest to the depositor)?
Following are examples of services that are provided by a banking company or financial institution to an “account holder”, in the ordinary course of business:-
i) Services linked to or requiring opening and operation of bank accounts such as lending, deposits, safe deposit locker etc;
ii) Transfer of money including telegraphic transfer, mail transfer, electronic transfer etc.
What are the services that are not provided by a banking company or financial institution to an account holder, in the ordinary course of business, and will consequently be covered under another Rule?
Following are examples of services that are generally NOT provided by a banking company or financial institution to an account holder (holder of a deposit account bearing interest), inthe ordinary course of business:-
i) Financial leasing services including equipment leasing and hire-purchase;
ii) Merchant banking services;
iii) Securities and foreign exchange (forex) broking, and purchase or sale of foreign currency, including money changing;
iv) Asset management including portfolio management, all forms of fund management, pension fund management, custodial, depository and trust services;
v) Advisory and other auxiliary financial services including investment and portfolio research and advice, advice on mergers and acquisitions and advice on corporate restructuring and strategy;
vi) Banker to an issue service.
In the case of any service which does not qualify as a service provided to an account holder, the place of provision will be determined under the default rule i.e. the Main Rule 3. Thus, it will be the location of the service receiver where it is known (ascertainable in the ordinary course of business), and the location of the service provider otherwise.
What are “Online information and database access or retrieval services”?
“Online information and database access or retrieval services” are services in relation to online information and database access or retrieval or both, in electronic form through computer network, in any manner. Thus, these services are essentially delivered over the internet or an electronic network which relies on the internet or similar network for their provision. The other important feature of these services is that they are completely automated, and require minimal human intervention.
Source – STEG 2012