Latest Query & Reply

Whether interest Income will take part in calculation of threshold limit of turnover for GST registration? Whether a banking organization is not required to take registration in GST if value of taxable service provided by bank is less than 20 lakh?

Reply

As per SAC code 9971, no GST on Services by way of-

(a) extending deposits, loans or advances in so far as the consideration  is represented by way of interest or discount (other than interest involved in credit card services)

As per Section 2 (6) of CGST Act, 2017— “aggregate turnover” means the aggregate value of all taxable supplies (excluding the value of inward supplies on which tax is payable by a person on reverse charge basis), exempt supplies, exports of goods or services or both and inter-State supplies of persons having the same Permanent Account Number.

From the above provision it has been clear that exempt supplies is also considered for threshold limit for taking registration in GST.

Therefore, Banks have to calculate the turnover including interest income for GST registration purpose.

However as per Removal of difficulties Order No. 1/2017 dated 13.10.2017, it is clarified that in computing his aggregate turnover in order to determine his eligibility for composition scheme, value of supply of any exempt services including services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount, shall not be taken into account.  (This is not applicable on Banks because banks cannot opt for composition scheme).