Ayush Sharma asked 5 years ago
Registration under GST as a Recovery agent for banks
Dear Sir/mam,
My client is running a recovery agent business for banks as a proprietor. He recovers money from the people who made default in payment of loan amount. For this, the bank pays some percentage of the amount so recovered from defaulters as a commission. He doesn’t want to get registered under GST but for opening a bank account he has to take registration. Now, I want to know that does his business covered in GST and what about invoicing and also when he received commission bank deduct some GST can he take input of that, and how to file GST returns.
Thank you
CA Sandip Agarwal answered 5 years ago
There is no mandatory requirement to have a GST Registration for opening an account with the bank.
Yes, his service is a supply & is therefore under the scope of GST
The services by a recovery agent are covered under reverse charge mechanism under GST. The invoice should be issued to banks under RCM.
As far as I Understand, banks are not deducting GST but are deducting TDS. TDS credit can be claimed when filing Income Tax Return for the A.Y
For further information, kindly contact me
