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ITC without incurring the expense

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JJJ

Need help

436 Points Posted on 18 June 2022

Our bank mistakenly charged us the processing fee twice. So instead of debiting our account for Rs 11,800 (ie 10,000 + GST) the debit happened twice.

The first was ok and the second was a simple mistake so they said they will rectify it.

Now they have returned the basic amount of 10k only, and they are saying they will not return the GST component of Rs 1,180 because they say we should claim the ITC.

We said that's not allowed because we have not availed any second service related to this ITC and we have also not incurred this expense, so how can we claim ITC.

But they say for banks its allowed.

Sounds suspicious to me. Does anyone have any idea on this?

Replies (21)

Quick Summary

A user's bank mistakenly charged processing fees twice, including the GST. While the bank refunded the basic amount, they refused to refund the GST component, claiming the user should claim Input Tax Credit (ITC). Other users debated this, with most agreeing that ITC cannot be claimed without a corresponding expense, despite the charge appearing on GSTR-2B. The original poster decided not to claim the ITC due to potential disallowance and interest penalties, and is asking the bank for a written explanation or the specific GST rule that allows claiming ITC on un-incurred expenses for bank charges.

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 18 June 2022

Your point is very valid.. You may claim ITC based on GSTR-2B though there is no exp .

JJJ

Need help

436 Points Posted on 18 June 2022

Yes it's showing in 2B so we can claim it now.

But if we don't pay the expense then we're supposed to reverse the itc. At least that's my understanding.

Bank people agree that the rule, but they're saying there is an exception for gst charged by banks. I find that hard to believe

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 18 June 2022

If possible discuss with your jurisdictional officer and take advice before claiming it

CA Rashmi Gandhi

Chartered Accountant

44442 Points Posted on 18 June 2022

You can't claim the ITC.

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 18 June 2022

You may claim it based on GSTR-2B after discussing it with JO

Gaurav Dixit

88 Points Posted on 19 June 2022

You can't claim the ITC.

sabyasachi mukherjee

Profession

19978 Points Posted on 19 June 2022

There are certain other parameters to be fulfilled.

Sandeep Jain

Pivate

706 Points Posted on 19 June 2022

You can not claim the ITC

CA Rashmi Gandhi

Chartered Accountant

44442 Points Posted on 19 June 2022

No parameter justify to claim ITC here.

Eswar Reddy S

CFO- at NHTF

15022 Points Posted on 19 June 2022

@ JJJ,

What is your final decision? What and all procedures you followed for this ?

It's some thing new and it may help others if we come across through same issue in future

JJJ

Need help

436 Points Posted on 19 June 2022

Thanks all. As is expected, most people's opinion is that we cannot claim ITC.

My thinking was the same because the GST rules are clear: no ITC without corresponding expense.

Even if we claim the credit now based on 2B, there is a high possibility the auditors will disallow it. And whenever th GST scrutiny happens, they can also disallow it and claim repayment plus high interest.

So we are not taking the credit. And ask the Bank to return us the GST amount or provide us the reference for the section that they are saying gives exemption to bank charges GST.

Let's see what happens.