(ET)
The indirect tax department’s investigation arm is scrutinising the GST credit availed by banks on taxes paid by their ATM vendors and could soon ask banks to cut the credit availed by them, two people with direct knowledge of the matter said.
The taxmen are examining whether banks are eligible to avail 100% of Goods & Services Tax (GST) credit on services provided by vendors such as ATM withdrawal when a majority of such transactions are not charged to consumers. The scrutiny started after banks claimed 100% input tax credit on the amount paid to ATM vendors who are responsible for maintenance and cash supply to the machines.
The vendors charge per withdrawal and add GST on the bills submitted to banks. Now, the banks have claimed input tax credit on the amount paid to vendors but this practice has come under the scanner.
