GST on Services of Business Facilitator (BF) or a Business Correspondent (BC) to Banking Company
86/05/2019- GST Dated:- 1-1-2019 CGST – Circulars / Ordes
GST
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 i
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t of banks with the BC specifically prohibits them from directly charging any fee to the customers for services rendered by them 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 provi
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BC is dependent on the meaning of the expression “accounts in its rural area branch”.
3.1 It is clarified that for the purpose of availing 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 adopt
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