91 FAQs ON FINANCIAL SERVICES ISSUED BY CENTRAL BOARD OF INDIRECT TAXES & CUSTOMS
Due to the complex nature of financial sector, there persisted a lot of confusion as to how GST applies to the sector. To address some of the pertinent issues relating to the industry, detailed FAQ’s has been issued to provide clarity. Key clarifications are outlined below:
For the purpose of registration, ATM, third party places (third party ATMs, Business correspondents, Customer service points or third party warehouses) does not constitute a place of business.
- Services rendered upto 30.06.2017 and invoice raised after 30.06.2017 will be subject to GST as time of supply is issuance of invoice under CGST Act, except in the case where advance is received prior to 01.07.2017.
- Services liable to Reverse Charge Mechanism rendered upto 30.06.2017 and payment received after 30.06.2017, point of taxation as per the Point of Taxation Rules, 2011 shall be the date of payment and accordingly liable to GST.
- A transaction once reported as B2C cannot be amended later to add GSTIN and convert the transaction as B2B.
- An insurer, a banking company or a financial institution, including a NBFC may issue a consolidated statement/ invoice/ advice to the customer at the end of the month with the details of all the charges levied and GST payable thereon.
- Registered person procuring goods or services from an unregistered person located in India or services from a person located outside India is required to raise a self-invoice on the date of receipt of such supplies and debit/credit notes for price adjustments. The same should be reported in the GST return of the month in which the supply takes place.
- Payment voucher is required to be issued at the time of making payment to the foreign supplier of services and the same should be reflected in the GST return.
- ATMs/Point of Sale machines moved between locations for the purpose of repairs, encryption etc. will not constitute a supply and that the equipment can be moved between locations on the basis of a delivery challan.
- Bill of Supply or any other document (in accordance with the provisions of any other law) in lieu of bill of supply to be issued by a bank for exempt services like interest on loans and advances, inter-se sale or purchase of foreign currency amongst banks.
- ITC credit on consolidated services procured and used for furtherance of business in more than one state needs to be appropriately invoiced or distributed through ISD mechanism.
- In case of registered customers, the bank/insurance company is not required to ascertain the place of consumption of service and can rely upon the GSTN provided by the customer.
- Services provided by the bank to RBI would be a taxable service.
- There are two supplies in case of charges levied by overseas correspondent banks facilitating trade and other cross border transactions – i) From bank in India to the importer/exporter ii) From overseas correspondent banks to bank in India.
- Services supplied by a supplier without consideration to an unrelated recipient and other than a distinct person would not amount to supply and not liable to GST.
- Income from Commercial Paper, Certificate of Deposits is not liable to GST
- Interest on finance lease transactions would be taxable under GST.
- In the case where banking and financial services are provided by multiple branches to a customer, location of the supplier is the place where Home branch/Account branch is located.
- GST is payable on management oversight or stewardship services provided by a related person/ distinct person even in case where no invoice is raised or no payment is made by the recipient or no entry is made in the books of accounts.
- Input Tax Credit of Krishi Kalyan Cess cannot be carried forward in the GST regime.
- Stock brokers would be covered by the definition of ‘intermediary’.
- Exit load in the form of a fee is liable to GST. Even if the exit load is in the form of units in the fund, it may be said that the consideration received in money was later converted to NAV units.
NOTIFICATION
Finance Ministry Notification F. No. 31013/16/2017-ST-I-DoR dated 04.06.2018
Government amends Rule 11 of GST Settlement of Funds Rules 2017 to allow provisional settlement of any sum of IGST collected in a particular FY and remaining unsettled so far, through adjustment in subsequent month(s) / year(s) based on returns filed by taxpayers.
JUDICIAL UPDATE
In writ petition filed by Narendra Plastic Pvt. Ltd. and Ors, Delhi HC admits challenge to ‘pre-import condition’ for availing exemption under Advance Authorization scheme
