GST on Bank Charges, Payment-Gateway Fees and Card Charges: How to Claim the Input Tax Credit

Every month your bank deducts charges — account maintenance, NEFT/RTGS fees, cash handling, loan processing, card-machine rent — and adds GST, generally at 18%. Payment gateways and marketplaces do the same on their commission. Individually the amounts are small; over a year they add up, and for many businesses the GST on them is never claimed because there is no supplier bill in the purchase register.

Is the credit available?

Yes, if the services are used in the course or furtherance of business and the usual conditions of Section 16 of the CGST Act are met: you have a tax invoice or a document allowed in its place, the supply appears in your GSTR-2B (the supplier has reported it against your GSTIN), you have received the service, and the supplier has paid the tax. Credit on bank charges is not among the blocked credits in Section 17(5).

The document: Rule 54(2)

Banks and certain financial institutions are allowed to issue a consolidated tax invoice, or any other document in lieu of it — including a statement of account — for the services supplied in a month, and that document need not be serially numbered and need not carry the recipient's address, as long as it carries the other required details (Rule 54(2) of the CGST Rules). In practice, many banks issue a monthly GST invoice or statement per GSTIN that you can download from net banking or request from the branch.

Why the credit goes missing

• The bank does not have your GSTIN against the account, so it reports the charges as a B2C supply and they never appear in your GSTR-2B.
• The bank has the GSTIN of a different registration (another state) than the branch or account where the charges arise.
• The charges are booked as one “bank charges” expense including GST, and the GST is never separated.
• Gateway and marketplace commissions are netted off settlements, so there is no payment entry to attach a bill to.

What is not GST: interest and penalties

Interest on loans and deposits is exempt from GST, so there is no GST — and no credit — on interest itself. The CBIC has clarified that additional or penal interest for delayed payment of an EMI is also treated as interest for this purpose. Processing fees, documentation charges and foreclosure charges on loans are generally taxable services with GST. Check each line of your loan statement rather than assuming.

A monthly routine

1. Give every bank and gateway your GSTIN for each account, in writing, and ask for confirmation that B2B reporting is enabled. Repeat when you open a new account or a new GSTIN.
2. Download the bank's GST invoice or statement for the month (or the gateway's tax invoice for its commission).
3. Record each charge with the GST separated — taxable value, IGST or CGST + SGST — against the bank or gateway as the supplier. Do not post the gross amount to one expense line.
4. Check GSTR-2B: the bank or gateway should appear under B2B with matching totals. If it does not, raise it with the bank promptly.
5. Claim only what is in 2B. Keep the rest on a watch list and claim when it appears, within the time limit in Section 16(4) (generally the 30 November after the end of the financial year, or the annual return if filed earlier).

Card and UPI settlements

For card or UPI acquiring, the merchant discount rate (MDR) is a service on which GST applies; for certain UPI and RuPay debit-card transactions the government has set MDR to zero, so there may be no charge and no GST. Gateways usually issue a monthly tax invoice for their commission — record it like any supplier invoice and match it to the settlement reports.

Doing it in Bebaak

Bebaak's GST credit screen handles exactly these cases — bank charges, gateway fees, card charges, import IGST on a bill of entry, and reverse-charge self-invoices — splitting the GST, posting the entry and checking it against GSTR-2B. See GST credit without a supplier bill.

Common mistakes

• Posting bank charges gross, with the GST inside the expense.
• Never giving the bank your GSTIN.
• Claiming credit from the bank statement total without checking GSTR-2B.
• Treating loan interest as if it carried GST.