In a recent development, ICICI Bank has disclosed to the exchanges that it is confronting a GST demand from the Maharashtra Goods and Services Tax (GST) department, totaling more than ₹ 7.47 crore. This demand encompasses GST and interest claims exceeding ₹ 3 crore each, coupled with a penalty of ₹ 11 lakh.
The GST audit reveals that the bank allegedly made a ‘disallowance of input tax credit (ITC) claimed in GSTR-3B/9, not confirmed in GSTR-2A, and ITC claimed from a registration-cancelled supplier.’ The department specifies a GST demand of ₹ 3,57,91,028, an interest payment of ₹ 3,78,21,814, and a penalty of ₹ 11,17,171, resulting in an overall demand exceeding ₹ 7.47 crore.
ICICI Bank has stated its intention to file an appeal against this order, asserting its commitment to addressing the matter through appropriate legal channels.
This development comes in the wake of notices issued by the Maharashtra GST department to various banks, commencing in December, regarding the taxability of custodial services provided to foreign portfolio investors (FPIs). The department contends that the custodial services offered by SEBI-registered custodian banks do not qualify as zero-rated supplies for export purposes.
The banking sector, including ICICI Bank, has been under scrutiny, with several banks receiving GST notices related to the use of their brand names by branches and subsidiaries. This follows a recent ruling by the Authority for Advanced Rulings (AAR) of Tamil Nadu, Maharashtra, and Karnataka, stating that each entity in a bank with a different GST number is considered a distinct entity for tax purposes.
As ICICI Bank gears up to contest the GST demand, the broader implications of these challenges to the banking sector’s taxation landscape remain to be seen. The banking industry continues to navigate through evolving GST regulations, seeking clarity and resolution on various fronts.
