Goods and Services Tax – 86/05/2019- GST – Dated:- 1-1-2019 – Circular No. 86/05/2019- GST F. No. 354/428/2018-TRU Government of India Ministry of Finance Department of Revenue Tax research Unit Room No. 156, North Block, New Delhi, the 1st January, 2018 To, The Principal Chief Commissioners/ Chief Commissioners/ Principal Commissioners/ Commissioner of Central Tax (All) / The Principal Director Generals/ Director Generals (All) Madam/Sir, Subject: GST on Services of Business Facilitator (BF) or a Business Correspondent (BC) to Banking Company- reg. Representations have been received seeking clarification on following two issues: (i) What is the value to be adopted for the purpose of computing GST on services provided by BF/BC to a banking
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em on behalf of the bank. On the other hand, banks (and not BCs) are permitted to collect reasonable service charges from the customers for such service in a transparent manner. The arrangements of banks with the Business Correspondents specify the requirement that the transactions are accounted for and reflected in the bank's books by end of the day or the next working day, and all agreements/ contracts with the customer shall clearly specify that the bank is responsible to the customer for acts of omission and commission of the Business Facilitator/Correspondent. 2.3 Hence, banking company is the service provider in the business facilitator model or the business correspondent model operated by a banking company as per RBI guidelines.
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vailing exemption from GST under Sl. No. 39 of said notification, the conditions flowing from the language of the notification should be satisfied. These conditions are that the services provided by a BF/BC to a banking company in their respective individual capacities should fall under the Heading 9971 and that such services should be with respect to accounts in a branch located in the rural area of the banking company. The procedure for classification of branch of a bank as located in rural area and the services which can be provided by BF/BC, is governed by the RBI guidelines. Therefore, classification adopted by the bank in terms of RBI guidelines in this regard should be accepted. 4. Difficulty if any, in the implementation of this Cir
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