Recommended instructions to bank for collecting GST Tax

Posted on 11 April 2023 Category : GST

Recommended instructions to authorized bank for collecting GST Tax

Minimum requirements to be met by a bank for being authorized for GST remittances are recommended to be as follows:

a) A centralized application for handling GST receipts for both modes (internet banking and OTC) in an end-to-end manner should be established.

b) There should not be any process flow discontinuities for any mode of the receipt.

c) The system should not require any post-event data entry at any stage.

d) The data entry at any stage of the process should be limited to the operations performed at the bank’s end.

e) The data received from GSTN portal should not require any fresh data entry and should not be open for modification.

f) There should be functional integration with GSTN portal and banks for both modes.

g) The IT system should have the ability to receive challan data and to communicate successful remittances on real time basis to GSTN portal for both modes.

h) The collation of data and reporting to GSTN portal and to RBI should be system based and not require manual operations.

i) The standards of communication prescribed by RBI (ISO 20022) should be followed.

j) There should be an upfront (before being authorized) as well as periodic audit of the IT system and the centralized application for handling GST receipts. The system audit should cover operational, technical and security aspects as per terms of reference and periodicity set by GSTN in consultation with Accounting Authorities.

k) One branch of the concerned authorized bank in the entire country should be established / designated as the e-FPB (Electronic Focal Point Branches) to handle all backend operations of GST receipts including operation of 39 tax accounts, data collation, reporting and reconciliation with RBI / GSTN / Accounting Authorities.

l) In addition, one or more branch of the concerned authorized bank in each State Capital should serve as GST helpdesk (Refer Para 27 above).

m) Three separate tax accounts for Government of India (one each for CGST, IGST and Additional Tax) and one tax account for each State/UT Government (36 in total) (for SGST) should be set up and operated by e-FPB alone.

n) The credit to respective tax accounts should be simultaneous with debit to the tax-payer’s account in case of internet banking mode, realization of a cheque or submission of DD/cash in case of OTC mode and receipt of NEFT / RTGS remittances from remitter banks into RBI’s pool account and then its transfer to tax accounts.

o) The above mentioned credit to the respective tax accounts should be by the IT system itself as per the mandate contained in the Challan data received from GSTN and not require manual intervention.

p) In addition to tax specific 39 accounts (for CGST, IGST, Additional Tax and SGST account for each State / UT Government), a common pooled account for cheque/Draft and CC/DC payments should be set up and operated by e-FPB ( but not required by those banks who can credit the amount ‘on the fly’).

q) As a part of the daily consolidated but transaction level report of successful receipts in each government account to RBI, there should be an assurance that all transactions credited to respective CGST, IGST, Additional Tax and SGST Accounts are being reported to RBI and no balances are left in these accounts meant for cheque realization. RBI will need to build a similar assurance for NEFT/RTGS remittances.

r) Suitable validations prescribed by GST Law should be inbuilt in the IT system / GST application. Some of such validations will pertain to non-acceptance of outstation cheques and non-deduction of cheque collection charges for OTC receipts, and mark up and collection of CC/DC charges (to be agreed) from tax payers.

It was agreed that the minimum standards to be met by the participating banks, as encapsulated above, should be communicated to the banks well in advance in consultation with RBI.

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