GST on bank charges

[Kaustubh Karandikar]

XYZ(India) transferred amount to the bank of the foreign supplier against import of goods. The foreign bank deducted their charges and paid the balance amount to the foreign supplier. Foreign supplier recovered these bank charges XYZ in foreign currency. Is XYZ required to pay GST under reverse charge on this amount paid?

[Padmanathan KV]

It is a gray area in my opinion. Better to pay RCM and claim ITC.

[Amit Agrawal]

As XYZ (India) has not received any services from foreign bank, it need not pay any GST under RCM.

However, one needs to look into valuation-issues while paying custom duties & IGST while importing subject goods.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Padmanathan KV]

Mr Kaustubh Karandikar,

I agree with Ld. Amit ji on the point that bank is not providing any service to Indian Importer.

Pls clarify how this payment will be accounted in the books of importer?

1. Will it be added to value of goods imported or as separate expense?

2. What document is issued for this transaction by exporter?

AI Summary

Reverse charge liability for foreign bank charges questioned; conflicting views on whether importer must pay GST under RCM. Whether an Indian importer must pay GST under the Reverse Charge Mechanism on bank charges deducted by a foreign bank is disputed. One opinion recommends paying reverse charge and claiming input tax credit; another holds no GST is due because the foreign bank did not supply services to the Indian importer for RCM purposes. The issue also engages customs and IGST valuation and how the importer should account for the charge-as part of the goods' value or a separate expense.