GST - Input Tax Credit

[Ethirajan Parthasarathy]

Some of the new generation banks raise invoice for bank charges in the following format.

Bank Charges	1000
Add : GST	180
Total	1180
Less : Discount	1000
Net Payable	180

The customer pays Rs.180 only to bank and book it as ITC. Is ITC in such situation eligible.

I invite experts opinion on above.

[Amit Agrawal]

What is nature of this transaction and reason for discount?

[Ethirajan Parthasarathy]

The nature of transaction is towards Bank Charges payable to Bank.

To attract new customers & to retain old customers, some new generation banks are raising invoices as above. Net effect is the whole basic bank charges of Rs.1000/- is not payable. Only GST of Rs.180 is paid. Please give your opinion about ITC in the above circumstances.

[Amit Agrawal]

ITC should be available to the recipient as bank is treating 'attracting new customers or retaining old customers' as its consideration.

P.S. I am not commenting on accuracy or otherwise about Bank's stance.

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

[Rajagopalan Ranganathan]

Sir,

If the Bank waives Bank charges by way of giving discount then the bank is collecting nil bank charges. When the bank charges are nil where is the question of paying GST. Before taking ITC please check up with the bank whether gst is deposited with the Government or the bank did not file any refund claim against GST paid/payable.

[Padmanathan KV]

I agree with views of Sri. Rajagopalan sir. If the factual position narrated by you is correct, there appears to be some anomaly with the practice followed by the bank.

Also pls check if Rs.1,000 is given as discount or by way of commercial credit note. Since most banks do not issue invoice/ CN-DN etc, kindly check in GSTR-2B. If it is latter case, ITC would be eligible.

[Shilpi Jain]

If the transaction between the bank and you is not a related party transaction then this invoice itself should not be issued. What is the purpose of issuing an invoice only for paying GST to the Govt when no actual consideration is paid for such services?

AI Summary

Debate on Input Tax Credit eligibility for bank charges with waived fees; concerns over GST payment and filing practices. A discussion forum addresses a query about the eligibility of Input Tax Credit (ITC) on bank charges invoices issued by some banks. The invoices show a total charge of Rs. 1000, with GST of Rs. 180, discounted to a net payable of Rs. 180. Participants question the legitimacy of claiming ITC under such circumstances, as the actual bank charges are waived. Opinions vary, with some suggesting ITC is valid if GST is paid to the government, while others highlight potential anomalies and suggest verifying the bank's GST filing practices.