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

No GST on Foreign Bank Charges for Exporters under Reverse Charge Mechanism, Confirms Section 13(8)(1) Interpretation. A user inquired whether XYZ, an exporter receiving payments through a foreign bank, must pay Goods and Services Tax (GST) on bank charges deducted by the foreign bank under the Reverse Charge Mechanism (RCM). The user suggested that since the service provider (the foreign bank) is located outside India, no GST is payable under Section 13(8)(1). Another participant confirmed that no GST is due on charges paid to a foreign bank, aligning with the user's interpretation.