Seeking your expert view on GST return disclosure of FD interest income

I seek your guidance on one point where I understand your view is that interest on bank FDs, being exempt, should be reported in GST returns.

With due respect, my understanding is that FD interest is exempt under Entry 27(a) of Notif. 12/2017-CT (Rate), but the bank is the supplier of the service, and the depositor is only the recipient. Since the depositor does not make any outward supply as per Sections 7 and 2(83), and no invoice is issued (Rule 46), I do not advise reporting the same in GSTR-1/3B/9. CBIC Circular 12/12/2017-GST appears relevant only for aggregate turnover threshold under Section 2(6).

I would appreciate your thoughts on whether GST returns, being transaction-based, can require reporting of such receipts.

Detailed Legal Reasoning

(A) Who is the supplier of service?

Under Entry 27(a) of Notif. 12/2017, the service is “extending deposits”.
The bank extends a financial service to the depositor by accepting deposits and paying interest.
The bank is the supplier; the depositor is the recipient (Section 2(93)).

(B) Does the depositor make any “outward supply”?

Outward supply (Section 2(83)) requires a supply made by a taxable person.
Mere receipt of interest does not constitute supply under Section 7.
There is no consideration flowing from depositor to bank for a service supplied by the depositor.

✔ Therefore, no outward supply exists in the hands of the depositor.

(C) Relevance of invoice & reporting mechanism

Rule 46 mandates invoice issuance only by the supplier.
Since the depositor is not the supplier, no invoice is issued and no transaction exists to be reported in:
- GSTR-1 (details of outward supplies),
- GSTR-3B (summary of outward taxable/exempt supplies), or
- GSTR-9 (consolidation of outward supplies).

GST returns do not capture income receipts unless they arise from outward supply.

(D) Why does Circular 12/12/2017-GST mention interest income?

The circular states:

“Interest earned on deposits shall be included in the aggregate turnover for registration purposes.”

This flows from Section 2(6), which includes:

Exempt supplies, and
Supplies made by a person, whether or not liable to tax.

⚠️ This deeming fiction applies only to “aggregate turnover” computation, not to return reporting.

Hence:

Included → Only for registration threshold / composition eligibility.
Not included → In GSTR-1 / 3B / 9, unless the person himself supplies such service.