GST on charges by the banks

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This discussion clarifies the accounting treatment for GST paid on bank charges when Input Tax Credit (ITC) is not claimable. If ITC is disallowed, the full amount, including the GST paid, should be charged to the Profit & Loss account. However, if an invoice or debit note is available from the bank, ITC can be claimed, and the value should be reduced from the bank charges expense.

CA Sudeep Singh

CA Sudeep Singh (Querist)
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17 May 2021 If an assessee isn't allowed to take itc on gst paid on bank charges, then, whether the assessee is allowed to charge full amount (bank charges plus gst paid there on) to P&L A/c?

Gokul Sharma

Gokul Sharma (Expert)
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17 May 2021 if ITC not allowed then trf to P&L a/c

CA Altamush Zafar

CA Altamush Zafar (Expert)
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17 May 2021 Yes charge to p&l if the amount has been paid by you

CMA Poornima Madhava

CMA Poornima Madhava (Expert)
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17 May 2021 Why is the assessee not allowed take ITC on bank charges?

CA Satish Badve

CA Satish Badve (Expert)
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17 May 2021 ITC is allowed against the tax invoice or debit note issued by the supplier. In case such debit note/ invoice is available from the supplier the ITC can be claimed.In case claimed you have to reduce the value from the bank charges expense account.

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