GST implication on Security deposits

[Rajesh Kumar]

Sir ,

A taxpayer provides GTA and courier services. He has provided bank guarantees as security to their customers. Is there any gst implication on this amount of security?

regards

[KASTURI SETHI]

Security deposit is refundable. It is a deposit and does not fall under the category of 'Advance Amount'. Hence not consideration.

Section 2(31) of CGST Act “consideration” in relation to the supply of goods or services or both includes

(a) _______________________

(b)_____________________________

Provided that a deposit given in respect of the supply of goods or services or both shall not be considered as payment made for such supply unless the supplier applies such deposit as consideration for the said supply;

[Shilpi Jain]

No gst liability on such amount.

Why is this doubt arising

[Ganeshan Kalyani]

Querist to elaborate his query so that experts can share their view.

AI Summary

Security deposit not consideration: refundable deposits not subject to GST unless applied as consideration under CGST definitions.
Security deposits provided as bank guarantees are refundable and do not constitute consideration under GST; they are not taxable unless the supplier applies the deposit as consideration for the supply. The factual nature of the deposit, its refundability, and any appropriation by the supplier determine whether GST liability arises.