Example of services provided to ‘account holder’ u/s 13(8) of IGST Act

By | June 4, 2018
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(Last Updated On: June 4, 2018)

Which services will qualify as  services provided to ‘account holder’ as per Section 13(8) of the IGST Act, 2017?

The place of supply of services supplied by a banking company located in India  to account holders located outside India is the location of the service provider i.e. banking company.

“Account” has been defined in Explanation (a) to section 13(8) of the IGST Act, 2017 to mean an account which bears interest to the depositor, and includes a non-resident external (NRE) account and a non-resident ordinary (NRO) account.

Services provided to holders of demand deposits, term deposits, NRE account  and NRO account outside India will be covered by the definition of account referred to above. Examples of such services are:
(i) services linked to or requiring opening and operation of bank accounts, such as, lending and deposits;
(ii) transfer of money including telegraphic transfer, mail transfer, electronic transfer etc.

Which services do not qualify as  services provided to ‘account  holder’ as per Section 13(8) of the IGST Act, 2017 and thus the place of  supply will be the location of the recipient of services?

Following are examples of services that are generally not provided by a banking  company or financial institution to an account holder (holder of a deposit  account bearing interest to the depositor including NRE and NRO account holders) in the ordinary course of business:

(i) financial leasing services including equipment leasing and hire-purchase;
(ii) merchant banking services;
(iii) securities and foreign exchange (forex) broking, and purchase or sale of
foreign currency, including money changing;
(iv) asset management including portfolio management, all forms of fund
management, pension fund management, custodial, depository and trust
(v) advisory and other auxiliary financial services including investment and
portfolio research and advice, advice on mergers and acquisitions and advice
on corporate restructuring and strategy;
(vi) banker to an issue service.

In case of any service which does not qualify as service provided to an account  holder, the place of supply for such services shall be the location of the recipient of services.

Q 50 and 51 of GST FAQs on Financial Services Sector published by CBIC

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