GST impact on Banking and Financial institutions
Place of Supply provisions under GST and impact on Banking and Financial institutions
Presently, the place of provision of services provided by banking institutions or financial institution like NBFC, etc, to account holders is the location of the service provider. Hence, though the customer may be outside India he would be liable to pay Service tax under. The GST Law the place of supply of service for banks/NBFC, etc., would be
|Item||Place of Supply|
|Services are linked to the account of the receiver||location of the service receiver on the records of service provider;|
|in other cases,||location of service provider.|
Where there is a concept of “intermediary services” as existing, however, the GST Law does not provide for anything specific under the place of supply provisions. Therefore, if banking and financial institutions, etc, would provide cross border intermediary services, for example, branch of a overseas bank providing services for trade finance transactions, the place of supply could be outside India under the present Law.
GST and impact on Banking and Financial institutions : Example : FAQs on GST ( Place of Supply of Goods or Services)
Q 16. A person in Goa buys shares from a broker in Delhi on NSE (in Mumbai). What will be the place of supply?
Ans. The place of supply shall be the location of the recipient of services on the records of the supplier of services. So Goa shall be the place of supply.
Q 17. A person from Mumbai goes to Kullu-Manali and takes some services from ICICI Bank in Manali. What will be the place of supply?
Ans. If the service is not linked to the account of person, place of supply shall be Kullu i.e. the location of the supplier of services. However if the service is linked to the account of the person, the place of supply shall be Mumbai, the location of recipient on the records of the supplier.
Finance Lease and operating Lease
Under GST regime a finance lease is considered as supply of goods and an operating lease as a service whereas leasing of an asset outside India is liable to IGST.
|Item||Treatment under GST|
|Finance lease||supply of goods|
|Operating lease||supply of Services|
|Leasing of an asset outside India.||Liable to IGST|
|Actionable Claim (securities, i.e., NPA etc )||Under GST “service” specifically includes actionable claim|
Education Guide on Goods & Service Tax (GST)