GST on Money Transfer Business......

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This discussion clarifies the Goods and Services Tax (GST) and Income Tax Return (ITR) treatment for money transfer businesses. The key point is that only the commission earned (e.g., 1% of the transferred amount) is considered taxable income for both GST and ITR purposes, not the entire amount transferred. This approach helps avoid discrepancies with bank statements and potential notices from tax authorities.

Gourav dewangan

Gourav dewangan (Querist)
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14 March 2023 Suppose Mr. Ram doing money transfer business. A person comes to Mr. Ram and requested to Mr. Ram to transfer Rs. 100000 to his son's account. Mr. Ram charge 1% as commission for this service. Hence person gives to Mr. Ram total of Rs. 101000 and Mr. Ram transfer to his son's account amounting to Rs. 100000. Now my question is that what is treatment of above transaction and money transfer business in GST and ITR. Weather Rs. 101000 consider as gross receipt and Rs 100000 as expenditure and Rs. 1000 as commission income in ITR or directly show Rs. 1000 as commission income in ITR. And for the same what treatment in GST, weather 101000 is taxable turnover or Rs. 1000 is taxable turnover i.e. commission income in GST. Please clarify the treatment of above transaction in GST and ITR.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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14 March 2023 Commission income is taxable turnover for IT as well as GST purpose.

Gourav dewangan

Gourav dewangan (Querist)
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14 March 2023 Thank you sir for reply. I want to further clarify that if we show commission income of 1000 in ITR and GST and not 101000 but transaction of Rs. 100000 will shown in bank account and if Mr. Ram doing this type of transaction whole of year and suppose in whole year total transaction Rs. 1,50,00,000 done by Mr. Ram in his bank account and commission earn on that money transfer is Rs 1,50,000 i.e. 1%. and we show Rs. 1,50,000 as commission income in ITR and GST. My doubt is that weather any chance of notice come from income tax department or GST department that transaction in Bank account is Rs.1,50,00,000 and this amount not reported in ITR or GST returns. Please clarify.

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)
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14 March 2023 What is the nature of your business? Don't you receive the money for its transfer? So the base amount is to be declared as 'amount for transfer' and not as turnover.
Let inquiry come at any time, you can justify it by the nature of transactions with relevant license and other required permissions.

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