A banking company M/s. YVPAY Bank Ltd. is registered under GST laws and provided the following services during the month of October, 2023. S. No.…

CA Final · Indirect Tax Laws · PYQS · May 2024
A banking company M/s. YVPAY Bank Ltd. is registered under GST laws and provided the following services during the month of October, 2023. S. No. Particulars Amount (₹) (i) Discount earned on bills discounted 6,00,000 (ii) Interest earned on reverse repo transaction 2,00,000 (iii) Penal interest recovered from the borrower for the delay in payment of loan EMIs/Dues 5,00,000 (iv) Services to merchants accepting credit /debit card payments using Point of Sale (POS) machine of bank. (In 50% cases, the amount per transaction was up to 1,500 while in the other cases, the amount was between - 1,500 to 2,000) 6,50,000 (v) Commission received for debt collection service 12,00,000 (vi) Interest charges for last payment of credit card dues 4,00,000 M/s. YVPAY Bank Ltd. had opted for optional method, under section 17(4) of the CGST Act, 2017, for claiming input tax credit in respect of its operations. For the month of October, 2023, the relevant details for input tax credit are as follows: (i) Amount of GST paid on eligible input services -8,00,000 (ii) Amount of GST paid on eligible capital goods -6,00,000 (iii) Amount of GST paid on items whose credit is blocked under section 17(5) of the CGST Act, 2017 -3,00,000 (iv) Applicable rate of GST is 18% on services provided. Based on the information given above, calculate the net GST payable by the bank for the month of October 2023. Ignore bifurcation of CGST and SGST or IGST.

Suggested Answer and Working Notes:

Computation of net GST payable by YVPAY Bank Ltd. Particulars GST @ 18% 2 (₹) (i) Discount earned on bills discounted [Exempt since consideration is represented by way of discount.] - (ii) Interest on reverse repo transaction [Exempt since consideration is represented by way of interest paid to bank.] - (iii) Penal interest on delayed payment of EMIs [Penal interest paid to bank is exempt] - (iv) Services to merchants accepting credit/debit card payments [Exempt since such services are provided to merchants in relation to settlement of an amount upto 2,000 per transaction through credit/debit card.] - (v) Commission for debt collection services [Not exempt, since it is not a service of extending deposits, loans or advances.] 2,16,000 (vi) Interest charges for late payment of credit card dues [Not exempt, since specifically excluded.] 72,000 Output tax payable 2,88,000 Less: 50% of eligible ITC on input services and capital goods availed in October [(₹ 8,00,000 +6,00,000) × 50%] [Blocked credit cannot be availed.] (7,00,000) Net GST payable Nil

Topics: Input Tax Credit

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