Foreign bank charges

[Kaustubh Karandikar]

XYZ exporting goods and the amount paid by the foreign customer is through a foreign bank. The foreign bank while transferring the amount to Indian Bank of XYZ, is deducting certain bank charges in foreign currency. Is XYZ required to pay GST on it under RCM. In my view this being a services supplied by banking company, will fall under Section 13(8)(1) and as per that since place of supply is the location of the supplier of service which in this case is outside India, no RCM is payable. Kindly confirm.

[Rajagopalan Ranganathan]

Sir,

No gst is payable on charges payable to a foreign bank.

AI Summary

Place of Supply rule: foreign bank charges not subject to reverse charge under GST when supplier located abroad Whether an Indian recipient must pay GST under the Reverse Charge Mechanism for bank charges deducted by a foreign bank. Banking charges are treated as services with the place of supply determined by Section 13(8)(1); where the supplier is located outside India, the place of supply is outside India and reverse charge does not apply, so GST is not payable by the Indian recipient on the foreign bank's charges.