GST on bank charges transaction
As per Rule 54(2) of CGST Rules, 2017, Banks shall issue a tax invoice or any other document in lieu of tax invoice. In case if an invoice isn't provided by the bank, then the bank statement shall be deemed to be an invoice. Such document shall be construed as Tax invoice even if it isn't serially numbered and whether or not it contains the address of recipient of taxable service.
Process for GST calculation on bank charges has been explained in this document.
Hinweis
The statutory background describes the original scenario. The rates and amounts below are examples, not current tax guidance.
Calculate GST on bank charges
- [!INCLUDE [open-search](../../includes/open-search.md)] Bank Payment Voucher, and then choose the related link.
- Select G/L Account in Account Type field and select relevant general ledger account in Account No. field.
- Select Bank Account in Bal. Account Type field and select relevant bank account in Bal. Account No. field.
- GST Registration No. and GST Registration Status fields shouldn't be blank on Bank Account.
- Location Code shouldn't be blank on Bank Payment Voucher.
- Select Bank Charge on the voucher line. The selected G/L account must match the Account on the bank charge setup.
- Choose Bank Charges and select the relevant Bank Charge code. Check GST Credit, GST Group Code, and HSN/SAC Code on the charge line.
- Enter GST Document Type and External Document No., and review the tax calculation before posting.
Bank charge posting examples
Intra-State Bank Payment with GST on Bank Charges where Input Tax Credit is available, for example bank charge of INR 10000 to be paid to bank and GST (9% CGST and 9% SGST) has to be calculated on bank charges amount.
GST calculation appears in the Fact Box as following:
Component Amount Bank Charge Amount 10,000 CGST 900 SGST 900 Once posted the bank payment GL entries for Intra-state bank charges with GST where Input Tax Credit is available will be as following:
Particulars Amount Bank Charges 10000 CGST Receivable Account 900 SGST/UTGST Receivable Account 900 Bank Account -11800
Inter-State Bank Payment with GST on Bank Charges where Input Tax Credit is available, for example bank charge of INR 10000 to be paid to bank and 18% IGST has to be calculated on bank charges amount.
GST calculation appears in the Fact Box as following:
Component Amount Bank Charge Amount 10,000 IGST 1800 Once posted the bank payment GL entries for Inter-state bank charges with GST where Input Tax Credit is available will be as following:
Particulars Amount Bank Charges 10000 IGST Receivable Account 1800 Bank Account -11800
Intra-State Bank Payment with GST on Bank Charges where Input Tax Credit isn't available, for example bank charge of INR 10000 to be paid to bank and GST (9% CGST and 9% SGST) has to be calculated on bank charges amount.
GST calculation appears in the Fact Box as following:
Component Amount Bank Charge Amount 10,000 CGST 900 SGST 900 Once posted the bank payment GL entries for Intra-state bank charges with GST where Input Tax Credit isn't available will be as following:
Particulars Amount Bank Charges 11800 Bank Account -11800
Inter-State Bank Payment with GST on Bank Charges where Input Tax Credit isn't available, for example bank charge of INR 10000 to be paid to bank and 18% IGST has to be calculated on bank charges amount.
GST calculation appears in the Fact Box as following:
Component Amount Bank Charge Amount 10,000 IGST 1800 Once posted the bank payment GL entries for Inter-state bank charges with GST where Input Tax Credit isn't available will be as following:
Particulars Amount Bank Charges 11800 Bank Account -11800
Deemed value calculation for GST base amount in foreign exchange transactions
As per GST law, A person supplying the services of exchange of foreign currency may exercise option to ascertain value in terms of Rule 32(2)b for a financial Year. In service related to supply of foreign currency, including money changing, the problem of valuation always arises, therefore the Rule states that, consideration should be taken to the difference in the buying rate or the selling rate.
Calculate GST on foreign exchange bank charges
- [!INCLUDE [open-search](../../includes/open-search.md)] Bank Receipt Voucher, and then choose the related link.
- Select Vendor or Customer in Account Type, and select the relevant account in Account No..
- Select Bank Account in Bal. Account Type field and select relevant bank account in Bal. Account No. field.
- GST Registration No. and GST Registration Status fields shouldn't be blank on Bank Account.
- Enter the Currency Code, amount, and Location Code. Leave Bank Charge cleared on the voucher line for a foreign exchange charge.
- Choose Bank Charges, and select a Bank Charge code with Foreign Exchange selected in its setup.
- Enter External Document No. and GST Document Type on the Journal Bank Charges line. Check GST Credit, GST Group Code, and HSN/SAC Code, and review the calculated tax.
Let us take the following example and check the GL entries of the posted transactions for different scenarios.
| Bank Charge Code | Lower limit | Upper limit | Formula | Min. Deemed Value | Max Deemed Value | Deemed % | Fixed Amount |
|---|---|---|---|---|---|---|---|
| BKCHG_01 | 0 | 10,00,000 | Deemed % | 0 | 0 | 1% | 0 |
Sample values for transactions
Component Amount CGST 9% SGST 9% IGST 18% Document Type Refund or Payment Account Type Vendor or Customer (Registered) Amount USD -1000 Currency USD (Exchange Rate 65) Amount (LCY) INR -65000 Bank Charge BKCHG_01 GST Transactional Value INR 650 (65,000 × 1%) GST Amount INR 117 (650 × 18%) Once posted the bank payment GL entries for Intrastate Bank Receipt Voucher with Document Type as Refund for Bank Charges and GST is posted with Credit Availment and GST Document Type Invoice, will be as following:
Document Type Particulars Amount Refund Vendor -65000 Refund SGST/UTGST Receivable Account 58.50 Refund CGST Receivable Account 58.50 Refund Bank Account 64883 The bank payment GL entries for Intrastate Bank Receipt Voucher with Document Type as Payment for Bank Charges and GST is posted with Credit Availment and GST Document Type as Invoice, will be as following:
Document Type Particulars Amount Payment Customer -65000 Payment SGST/UTGST Receivable Account 58.50 Payment CGST Receivable Account 58.50 Payment Bank Account 64883 The bank payment GL entries for Intrastate Bank Receipt Voucher with Document Type as Refund for Bank Charges and GST is posted with Credit Non-Availment and GST Document Type as Invoice, will be as following:
Document Type Particulars Amount Refund Vendor -65000 Refund Other Charges 117 Refund Bank Account 64883 The bank payment GL entries for Intrastate Bank Receipt Voucher with Document Type as Payment for Bank Charges and GST is posted with Credit Non-Availment and GST Document Type as Invoice, will be as following:
Document Type Particulars Amount Payment Customer -65000 Payment Other Charges 117 Payment Bank Account 64883