Trasactions in bank account linked to gst

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Inspector
23 Points Posted on 20 July 2020

If a proprietor has linked a personal account to his/her gst number. And ends up doing personal transactions in the account aswell, will those transactions (credit) be treated as sale and liable for taxation, what are the rules or clauses in the act that clarify about this.

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On 20 July 2020 at 13:00 Report
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This discussion explores whether personal transactions made in a bank account linked to a GST number are considered taxable sales. While direct personal expenses aren't taxable, any credit entries in the account that relate to business supplies, as defined by Section 7 of the GST Act, could be subject to taxation. Authorities may scrutinise these accounts, especially during GST cancellation, to identify potential undeclared supplies. It's advised to maintain a clear separation between personal and business finances and bifurcate all bank entries to avoid complications and potential rejection of expenses or addition of credits as income.

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GST Consultant
15986 Points Posted on 20 July 2020
If the transaction are in nature of supply then they are taxable.
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On 20 July 2020 at 13:40
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Inspector
23 Points Posted on 20 July 2020

Kindly elaborate. How do we determine it as supply, if there are personal deposits in the account then how do we treat them.

A businessman came for cancellation of gst and he was asked to furnish bank statement by the authoroties, and bow they are saying you have shown sale(gstr1) which is less than the total amount credited in the account, its pertinent to mention that this was his personal savings account which he had linked with gstin

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On 20 July 2020 at 13:44
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GST Consultant
15986 Points Posted on 20 July 2020

If money is earned then there has to be some source. If the source is in nature of supplies as per section 7 then it is taxable. If it is mere transaction in money like transfer of money from one account to other without anything in return then it is not taxable.

The officer is right in taking clarification as there can be hidden supplies.

The definition of business is also very wide as compared to previous laws so a lot many thing which were not considered business before are now being considered as business.

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On 20 July 2020 at 13:52
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1102 Points Posted on 20 July 2020
If any amount credited in your account , if these entries are related with loan and interest there on then there is no GST liability otherwise Can be come under scope of supply,
You should have bifurcation of Each and every entry in your bank account, If these related with business then you make entry in there respective GSTR return.
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On 20 July 2020 at 15:49
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PRACTICE
3584 Points Posted on 20 July 2020
No such specific rule not there . it is better to keep isolation of personal entries. other ITO has more power to reject expenses or add credit as income
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On 20 July 2020 at 20:50

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