GST on management oversight or  stewardship activities of Bank : CBIC Clarify

By | June 4, 2018
(Last Updated On: June 4, 2018)

Will the management oversight or  stewardship activities performed in  relation to business operations by the Head Office of a Bank to a  Branch in India be considered as a  supply of services by the Head Office even when there is no  consideration charged by the Head Office, nor any expenditure recorded in the books of account of the Branches?

As per Schedule – I to the CGST Act, 2017, supply of services between distinct entities will be a taxable supply even in absence of a consideration.

If tax is payable on provision of  management oversight or  stewardship services by a related person, what shall be the value of supply when no invoice is raised, no payment is made by recipient or no entry is made in the books of accounts of the recipient of service? What will be the time of supply?

As per Rule 28 of the CGST Rules, 2017, the Bank may obtain a certificate from  the Branch or Office providing the estimated cost of rendering the support. It may be backed by a certificate issued by a chartered accountant or cost accountant.
In such cases, the time of supply shall be the date when such costs are  determined or certificate is received and the GST liability on the said costs shall be discharged accordingly.

This can be done before the expiry of the quarter during which such supply was made as provided in 2nd proviso to Rule 47 of the CGST Rules, 2017. For this purpose a document may be issued by the entity supplying such services

Q 55 and 56 of GST FAQs on Financial Services Sector published by CBIC

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