Regarding Input tax credit availed on bank charges and claiming refund of the same on Export of goods without payment of GST.

[sathish k]

Generally while having Cash credit or overdraft account, Bank collects some charges for the transactions made through such account (like IMPS, Neft and Cheque / ledger folio charges). While receiving export payments and duty drawbacks also bank collects some additional charges for processing the same and crediting to our account. The above charges and fees are inclusive of GST. The bank instead of issuing filing individual transaction charges while filing their GST returns, it aggregates all the charges on monthly basis and file the total tax amount of charges and corresponding tax amount and the same is made available to taxpayer in GSTR - 2B and GSTR-2A respective periods.

The main issue : Incase of export, while claiming the refund of ITC on export without payment of GST, I had included those bank charges on the ITC available to be claimed and submitted RFD-01. But the claim of ITC with respect to tax on bank charges has been rejected by proper officer couple of times stating that it is ineligible without providing any clarification or base justification for it. 

Query : whether the GST paid on bank charges is eligible or ineligible to be claimed while claiming a refund on the export of goods without payment of GST?

Kindly help me to understand by supporting provisions/justifications from the Act / Rules so that I would convey that to the proper officer while processing for submission of refund application

[Amit Agrawal]

In terms of Section 16 (1) of the CGST Act, 2017, you are entitled to take credit of input tax charged on any supply of goods or services or both to you which are used or intended to be used in the course or furtherance of his business.

And above-listed bank charges are definitely fulfill above requirement. And in Section 16 of the IGST Act, you should get refund for such ITC.

Kindly try and talk to the officer to understand his position. And, he still insist, you can request him to first issue SCN proposing the refund-rejection with reasons, allowing you to file reply to SCN as well as personal hearing, and then, pass a speaking order

In case of ITC claim already rejected, only option to file an appeal there-against.

Above are strictly my personal views and same should not be construed as professional advice / suggestion.

[sathish k]

Thank you sir

[Shilpi Jain]

Agree. The banks, any document issued by them will be regarded as invoice and hence even the monthly summary is good enough.

Also there is no requirement of one to one correlation of input and output for claiming refund.

[sathish k]

Thank you @shilpi Jain. I will try to convince the officers based on these provisions and try make them not to reject the claim.

AI Summary

Input tax credit on bank charges eligible for refund on export without payment of GST if used in business. Bank charges attracting GST that are used or intended to be used in the course or furtherance of business qualify as input tax credit; aggregated monthly bank statements are acceptable documentation and no one to one correlation with exports is required. Such ITC may be included in refund claims for exports without payment of GST, and if rejected by the officer the remedy is to seek a reasoned SCN, submit replies and personal hearing, and thereafter file an appeal against any adverse order.