Mumbai: Banks in India are under the scanner of tax authorities, who are currently determining the Goods and Services Tax (GST) credit requested by financial institutions on the levies paid to concerned ATM vendors, according to an Economic Times report based on comments from two sources. If banks are found violating norms, they could be asked to reduce the amount of credit availed by financial institutions.
Whether banks stand eligible to claim 100 per cent GST credit on services provided by its ATM vendors is the angle that tax authorities are exploring. It may be noted that a bulk of such services comprise ATM withdrawals – something which is not charged to customers.
This development comes shortly after banks started demanding 100 per cent input tax credit on the amount paid to ATM vendors who are responsible for functionality, cash supply and maintenance of the machines.
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As a standard practice, ATM vendors send bills to banks for charges incurred towards ATM transactions and other expenses, and subsequently, banks claimed input tax credit on the amount spent on vendors. However, tax officials are now closely scrutinising the matter as they are of the view that banks do not charge customers for any number of withdrawals which are free, thus claiming 100 per cent input tax is wrong.
It should be noted that the investigation has found that on an average, only 40 per cent of total ATM withdrawals are charged from customers. On the other hand, if input tax credit is only allowed on chargeable transactions, banks would either have to incur massive losses or burden customers with the charge.
An official who knew core details of the case told ET that banks could get notice or summons, seeking clarity on input tax credit on ATM services and also additional data to investigate further.
Source by:- timesnownewsShare: