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Gst on banks financial services.

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akshay mohite

70 Points Posted on 04 October 2020

As a banker I have a query that the services provided by bankers to public the Gst paid on that services while computing the income and revenue sources for bank the income generated via charges is shown in income and expense statement and if yes whether it will be not doubled tax as already Gst has been charged on that banks services? Clear my doubt with detailed explanation in accounting and taxation terms.

Replies (8)

Quick Summary

This discussion clarifies the treatment of GST on financial services provided by banks. While banks collect GST from customers on their charges, this GST is remitted to the government and isn't considered a cost to the bank. The bank charges themselves, however, represent income and are subject to income tax after deducting other business expenses. Essentially, customers bear the GST, while banks pay income tax on their profits.

Nidhi

Chief Accountant

1673 Points Posted on 04 October 2020

If you are talking about GST and income tax, than both are different

akshay mohite

70 Points Posted on 04 October 2020

Yes then only the bank charges which charged Gst of 18% will be also again in income tax for income and expenditure statement ?

Sagar Patel

Tax and Business Consultant

5533 Points Posted on 05 October 2020

GST Paid by bank on services charges is not the cost of bank, because bank charge GST along with charges from Customer and that Deposit it to Goverment, So, it's tax collected from customer and Deposited to Goverment.

But By Providing this services and charging fee for same,bank also earn income. So this charges is income for bank and same will be included in income side of profit and loss Account.
After deducting any Expenses of bank if bank have a profit than its required to pay income tax on same...

GST cost is ultimately borne by Customer, whereas bank only pay income tax from their pocket.