RCM ON FOREIGN BANK CHARGES

[NILESH PITALE]

Dear Expert - Observation raised by GST Officer During The Audit

My Client is exporter, Importer & Local Trader

Observation : NON-PAYMENT OF RCM ON FOREIGN BANK CHARGES: During the course of Audit, It is seen that foreign bank have deducted the bank charges against receipt of foreign currency. The banks are deducting charges for remittance of money. The location of the supplier i.e. Bank is outside India and location of the recipient is in India (taxable territory). from the data provided. it is seen that a certain amount of charges are shown as short receipt which are actual the Bulk Charges of the foreign Bank. The Service provided by foreign bank for remittance to export proceeds is liable to GST as per Notification No. 10/2017-Integrated Tax (Rate), dated 27.06 2017, which stipulates that any service supplied by any person who is located in a non-taxable territory to any person located in a non-taxable territory, the person located in the taxable territory will be paid on reverse charge basis by the recipient of such services---------------- is it RCM Applicable Please Guide

AI Summary

Supreme Court to Decide on GST Reverse Charge Liability for Exporters on Foreign Bank Charges A GST audit raised concerns about non-payment of Reverse Charge Mechanism (RCM) on foreign bank charges for an exporter, importer, and local trader. The issue involves whether the exporter is liable to pay GST on charges deducted by foreign banks for remittance services. The matter is pending before the Supreme Court, as the Appellate Tribunal previously ruled that Indian banks, not exporters, are the service recipients liable under RCM. Experts in the forum suggest that the Indian bank is typically the service recipient, and the exporter should not be liable for RCM. They recommend verifying the transaction structure to clarify responsibilities.