Bank Charges GST Setup in D365BC
- 10 months ago
Agenda of the Video: To define SETUP for Bank Charges (GST) in D365BC.
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Short-Blog Post✨
Topic: Bank ChargeGST Setup in Dynamics Business Central (D365BC).
https://lnkd.in/dFtXBn-m
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The SAC code for Bank Charges is 997111 which falls under the heading of financial services (except investment banking, insurance services and pension services).
Banks provide various services to their customers other than lending services on which they recover charges against those services.
Some of the examples of such service charges are:
ATM Card Charges
Cash Handling Charges
Loan/Working Capital Limit Processing Charges
AMB Non-Maintenance Charges
Cheque Return Charges
Locker Charges
Custodian Charges
Underwriting Service Charges
RTGS/NEFT Charges
BG/LC Charges
Foreign Exchange Remittance Services Charge etc.
All such service charges are covered under the ambit of GST and thus liable for GST. However, the customers usually forget to take input tax credit of the GST so charged by bank as these charges are not separately mentioned in the bank statement.
This might also be due to lack of awareness amongst the customers.
ITC is available for bank charges?
Yes, ITC for GST on bank charges is available in terms of CGST Act subject to fulfilment of conditions prescribed therein.
Accordingly, if we are a registered taxpayer (regular) under GST, we can take ITC for GST levied on bank charges.
It is to be noted that ITC for GST on bank charges is not blocked by the provisions of section 17(5) of the CGST Act.
What are the conditions for taking ITC?
Following conditions are to be fulfilled for taking input tax credit in accordance with section 16 of CGST Act:
We must possess tax invoice/debit note or any other tax paying document.
Goods or services are actually received by.
The Tax has been paid to the Government either by Cash or ITC by the Bank on such Bank Charges.
Furnishing of Return under section 39 of the CGST Act.
How can we take ITC for GST on Bank charges as bank does not issue a Tax Invoice for such Charges.
If, Banks do not issue a tax invoice and bank charges are mentioned in the bank statement only, a valid question arises as to how can we take ITC in absence of Tax Invoice.
We need not worry about this issue as the Bank Statement received by the taxpayer is accepted as a valid document to claim ITC for GST on Bank Charges.
✅This has also been clarified by CBIC.
✅If the bank statement shows bifurcation of GST separately from bank charges, there will be no computation problems for ITC.
If GST is Not shown separately, you may approach the branch of your Bank to obtain a Consolidated Statement of Charges in our account also.
ITC on bank charges and its accounting treatment.
✨Most important point to consider as regards ITC on Bank Charges is that the ITC on such Bank Charges is reflected in your GSTR-2A so that ITC claimed by you in GSTR-3B is matched with ITC paid by the bank on our behalf.
----------------------------------------------
Short-Blog Post✨
Topic: Bank ChargeGST Setup in Dynamics Business Central (D365BC).
https://lnkd.in/dFtXBn-m
-----
The SAC code for Bank Charges is 997111 which falls under the heading of financial services (except investment banking, insurance services and pension services).
Banks provide various services to their customers other than lending services on which they recover charges against those services.
Some of the examples of such service charges are:
ATM Card Charges
Cash Handling Charges
Loan/Working Capital Limit Processing Charges
AMB Non-Maintenance Charges
Cheque Return Charges
Locker Charges
Custodian Charges
Underwriting Service Charges
RTGS/NEFT Charges
BG/LC Charges
Foreign Exchange Remittance Services Charge etc.
All such service charges are covered under the ambit of GST and thus liable for GST. However, the customers usually forget to take input tax credit of the GST so charged by bank as these charges are not separately mentioned in the bank statement.
This might also be due to lack of awareness amongst the customers.
ITC is available for bank charges?
Yes, ITC for GST on bank charges is available in terms of CGST Act subject to fulfilment of conditions prescribed therein.
Accordingly, if we are a registered taxpayer (regular) under GST, we can take ITC for GST levied on bank charges.
It is to be noted that ITC for GST on bank charges is not blocked by the provisions of section 17(5) of the CGST Act.
What are the conditions for taking ITC?
Following conditions are to be fulfilled for taking input tax credit in accordance with section 16 of CGST Act:
We must possess tax invoice/debit note or any other tax paying document.
Goods or services are actually received by.
The Tax has been paid to the Government either by Cash or ITC by the Bank on such Bank Charges.
Furnishing of Return under section 39 of the CGST Act.
How can we take ITC for GST on Bank charges as bank does not issue a Tax Invoice for such Charges.
If, Banks do not issue a tax invoice and bank charges are mentioned in the bank statement only, a valid question arises as to how can we take ITC in absence of Tax Invoice.
We need not worry about this issue as the Bank Statement received by the taxpayer is accepted as a valid document to claim ITC for GST on Bank Charges.
✅This has also been clarified by CBIC.
✅If the bank statement shows bifurcation of GST separately from bank charges, there will be no computation problems for ITC.
If GST is Not shown separately, you may approach the branch of your Bank to obtain a Consolidated Statement of Charges in our account also.
ITC on bank charges and its accounting treatment.
✨Most important point to consider as regards ITC on Bank Charges is that the ITC on such Bank Charges is reflected in your GSTR-2A so that ITC claimed by you in GSTR-3B is matched with ITC paid by the bank on our behalf.