27 June 2022
One of my clients had started an application similar to PAYTM . Now I want to know that how GST will be charged on my client if any payment or recharge is done through his app by any customer. How will it be shown in GSTR-3B - like the recharge amount will be assumed as inclusive of GST and accordingly the amount will be shown in return or any thing else will be done? What rate of GST will be applicable on the same?
07 July 2024
For your client's application similar to PAYTM, here's how GST would typically apply:
1. **GST on Recharge or Payment Transactions:** - When customers recharge or make payments through the app, GST will be applicable on the service fee or commission earned by your client for facilitating these transactions. - If the app charges a service fee or commission on transactions, GST will be levied on that service fee or commission. - The rate of GST applicable would depend on the nature of services provided and how they are classified under GST.
2. **GST Treatment in GSTR-3B:** - Your client will need to report the taxable value (which includes the service fee or commission) in their GSTR-3B return. - The GST amount charged on the service fee or commission should be separately mentioned in the return.
3. **GST Rate Applicable:** - The specific rate of GST applicable would depend on the nature of services provided by the app. For financial transactions and intermediary services like those provided by payment gateways or e-commerce operators, GST is generally levied at 18% (as per my last update). - It's important to verify the exact classification of services and the applicable GST rate based on the latest GST notifications and circulars issued by the GST authorities.
4. **Invoicing and Compliance:** - Your client should issue GST-compliant invoices to the customers for the service fee or commission charged. - Ensure that the invoices clearly state the GST amount charged and comply with the invoicing rules under GST.
To ensure accurate compliance with GST regulations specific to your client's application, including any recent changes or notifications affecting the payment services sector, it's advisable to consult with a GST consultant or tax advisor. They can provide tailored advice based on the latest GST updates and help navigate the complexities of GST compliance for fintech and payment service providers.
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