ICAI releases note on GST compliance in banking sector

ICAI releases note on GST compliance in banking sector Banking Services under GST w.e.f. July 1, 2017 GST is applicable on Banking services as far as it qualifies the taxable event i.e Supply of Services. However, following Supplies made without consideration as specified in Schedule I of the Central Goods and Services Act, 2017 (“the CGST Act”) are subject to tax, which is a paradiam shift from the earlier regime:

• Permanent transfer or disposal of business assets where input tax credit (“ITC”) has been availed on such assets.

• Inter Unit Supply: Supply of goods/ services or both between related persons or between distinct persons as specified in section 25, when made in the course or furtherance of business.

Therefore, any supply of goods or services or both supplied or received by one branch bank to another or by Head office bank to branch bank or vice versa without consideration, shall be considered as supply under GST for payment of tax.

• Activity performed by employer to employee without consideration will be taxable under GST, except where the value such supply does not exceed Rs 50,000 in a financial year.

Athough no consideration is involved yet, payment of tax needs to done on value determined in terms of section 15 of the CGST Act read with Rule 28 of the Central Goods and Services Rules, 2017 (“the CGST Rules”).