The anti-evasion wing of Central GST (Goods and Services Tax) and central excise in Mumbai has alleged a tax evasion of around 25 crore by RBL Bank over fees charged by banking correspondents (BCs) in transactions spanning three years.
The ‘cut and pay’ model of the bank undervalued the domestic money transfer services, a source at the GST body said.
RBL Bank provides the domestic money transfer services to customers through their corporate BCs and further agents of these BCs.
The BCs are permitted to charge the customers a service fee in the range of 1-1.5 % of the remittance amount whereas the “residual/balance amount” specified in the agreements between the bank and the BCs is in the range of 0.2% to 0.6% of the remittance amount. The BC agents/retailers are allowed to retain their remunerations in cash out of the service fee collected from the customers and only the ‘residual/balance amount’ is passed on to the bank. The service fee collected from the customers is inclusive of service tax/ GST. This ‘residual/ balance amount’ is being received into the ‘fee account’ of the bank, and the bank is discharging its service tax/GST liability only on this amount. As a result, GST is being evaded by the bank on the amount that is retained by the BC agents/ retailers in cash, the source claimed.
“0.2% to 0.6 % is BC agent/retailer commission, which is part of total service fees and tax is not been paid on part of agent/retailer service fees,” said the source.
According to the anti-evasion wing sources the offences may attract stringent measures under the provisions of Section 69 of the CGST Act, 2017.
A mail to RBL Bank seeking response did not elicit any response.