January 6, 2019

Banking company is liable to pay GST on the entire value of service charges

[toc]

Introduction

The board, vide circular no. 86/05/2019-GST dated 1st January, 2019, has clarified various issues with respect to services of BF or BC to the banking company and the same is highlighted in the current article. Banking company to pay GST on the entire value of service charges.

Banking company is liable to pay GST on the entire value of service charges

Services are provided by the BF/BC to the customers on behalf of the banking company.
As per the agreement between the bank and the BC, BC cannot directly charge any fee to the customer. In fact, banks are permitted to collect reasonable service charges from the customer for such services in a transparent manner.
Further agreement with the customer specifically mentions that bank is responsible for the acts of omission and commission of the BF/BC.
In view of above, it has been clarified that the banking company is the service provider and the banking company is liable to pay GST on the entire value of service charges / fee charged to the customer whether or not received via BF or BC.

Clarification on scope of Services by BF/BC to a Banking Company

Sr. No. 39 to notification no. 12/2017 – Central Tax (Rate) dated 28th June, 2017, provides exemption from GST to services falling under heading 9971 provided by the BF/BC to a banking company with respect to accounts in its rural area branch.
In order to claim the above exemption, services provided should mandatory be with respect of accounts in a branch located in the rural area of the banking company.
It is clarified that the guidelines provided by the RBI would be accepted in order to classify the branch of a bank in the rural area and exemption would be applicable accordingly.

Know more about SEIS Export Incentive

DISCLAIMER: The views expressed are strictly of the author and VJM & Associates LLP. The contents of this article are solely for informational purpose. It does not constitute professional advice or recommendation of firm. Neither the author nor firm and its affiliates accepts any liabilities for any loss or damage of any kind arising out of any information in this article nor for any actions taken in reliance thereon.

GST Check-list you need to tick as stepping in new Financial Year

Cross-empowerment is without jurisdiction in absence of any notification under GST Law

Supply to goods for Job Work, have you filed your ITC-04

RoDTEP benefit is extended to EOU, AA Holders and SEZ Units

Streamlining filing of appeal by Department before ITAT, High Court and Supreme Court| Circular No. 5/2024 dated 15th March, 2024

Judgements

Streamlining filing of appeal by Department before ITAT, High Court and Supreme Court| Circular No. 5/2024 dated 15th March, 2024

Appeal against order of any authority can be filed by the party aggrieved by the order, i.e., the Assessee or the Department. Filing of appeal involves lots of cost and effort and also takes up the time of the judicial authority. Assessee files appeal after considering various factors such as amount of pre-deposit required, amount involved in dispute, time factor etc. However, for department appeal the CBDT specifies a monetary limit, i.e., upto specified monetary limit, no appeal shall be filed by the department.

09/04/2024 No Comments

GST Check-list you need to tick as stepping in new Financial Year

News and Announcements

GST Check-list you need to tick as stepping in new Financial Year

As we are stepping into the new Financial year, there are various compliance requirements which a taxpayer is required to do with the changing year. Any non-compliance on part of the taxpayer can lead to major disallowances or withdrawal of benefits from the taxpayer.
This article list down check-list which a taxpayer is required to tick as they enter into new financial year:

09/04/2024 No Comments

Cross-empowerment is without jurisdiction in absence of any notification under GST Law

Judgements

Cross-empowerment is without jurisdiction in absence of any notification under GST Law

The Writ petition was filed to challenge the proceedings initiated against the taxpayer by the central authorities where the taxpayer is assigned to the State authorities and vice versa. The Petitioner contended that power of cross-empowerment was given under Model GST Law. However, GST Law enacted is different from the Model GST Law.

09/04/2024 No Comments