financial institutions include
(State Bank of India), hsbc And among others, he said. , ICICI and Axis did not respond to queries. HSBC declined to comment.
People with knowledge of the matter said that at present most banks either do not charge royalty or pay a certain amount, which will be challenged by the tax authorities.
issue raised earlier
According to a February letter by the tax department to one of the large lenders, “You have provided services of brand name, logo and tagline to your respective persons for which no fee was charged and no invoice was issued.” ” ET has seen this message.
He said the cost of GST for big banks could be thousands of crores of rupees every year.
A transaction between related parties, a company and its subsidiary is liable even if the payment has not been made under the GST rules. Additionally, the tax department is arguing that there is a ‘supply’ between the custodian of the brand – the bank – and its related party, or its subsidiaries including mutual fund houses. As per the GST law, ‘supply of a brand’ is deemed to be from the parent company to the subsidiary, which is a related party.
Abhishek Jain, tax partner, KPMG India, said, “The issue is long debated under various tax laws and involves subjectivity in the matter of assessment, or whether there exists a de facto transfer of tax levy rights.”
“This can be clearly articulated with the specific confidence given by the government to the ground realities, with the current government aiming for certainty for businesses in various contentious issues.”
The IT department has asked another large private bank to provide audited balance sheets for 2018 to 2021 as well as details of joint ventures, affiliated companies and the total annual income of each of them. The bank charges around Rs 2 crore annually as royalty or fee for using the brand name and logo from some of its subsidiaries.