The bank charges hsn code is SAC 9971, the heading for financial and related services, and GST on bank charges is 18%. That covers account fees, cheque book charges, card annual fees, loan processing fees, EMI conversion fees and late payment fees.
Interest itself is exempt: the interest on a loan, a fixed deposit or the interest part of a credit card EMI carries no GST. This page explains the codes, the credit card EMI question, and how a business claims credit on bank fees. Other service codes are on the SAC code hub.
Bank charges: codes and GST rates
Item / SAC / GST- Account maintenance and cheque book charges18%SAC 997113 or 99715
- Debit and credit card annual fees18%Card services
- Loan processing fees18%Fee, not interest
- Credit card EMI conversion or processing fee18%Fee portion only
- Late payment fees on credit cards18%Fee for the service
- NEFT, RTGS and other transfer charges18%Where charged
- Locker rent18%Safe deposit services
- Interest on loans and depositsExemptNot a taxable fee
- Interest part of credit card EMIExemptInterest on credit
- Foreign exchange conversion18%On the value set by the rules
- Interest on late GST paymentNo GSTNot a supply
Quick facts
SAC heading
9971: financial and related servicesGST rate
18% (9% CGST + 9% SGST)Exempt
Interest on loans, deposits and advancesAuxiliary services
99715, such as 997159Digits to print
4 digits up to Rs 5 crore turnover, 6 aboveCredit
Business can claim GST on bank charges
Bank charges hsn code list
| Code | Service | GST |
|---|---|---|
| 99711 | Financial services except investment banking, insurance and pension | 18% |
| 997113 | Deposit and account services | 18% on fees |
| 997114 | Credit granting services | Interest exempt, fees 18% |
| 99712 | Investment banking services | 18% |
| 99713 | Insurance and pension services | Exempt or 18% |
| 99715 | Services auxiliary to financial services | 18% |
| 997158 | Foreign exchange services | 18% on rule based value |
| 997159 | Other auxiliary financial services | 18% |
Gst on credit card and credit card EMI
Credit card annual fees, late payment fees and EMI processing fees are bank charges at 18%. When a purchase is converted into EMIs, the interest part of each EMI is exempt, but any processing fee is taxed at 18%. A no cost EMI where the seller gives a discount equal to the interest still involves a bank charge to someone; read the EMI terms on your statement.
Interest is not a bank charge
Interest or discount on deposits, loans and advances is exempt from GST. This includes interest on home loans, car loans, fixed deposits and savings accounts. Penal interest on loans may be treated as interest or as a charge depending on its nature. Interest on late payment of GST under section 50 of the CGST Act, at 18% a year, is a statutory charge, not a supply, and carries no GST.
Bank statement example
A current account statement shows: Cheque book charges Rs 500, CGST 9% Rs 45, SGST 9% Rs 45. SMS alert charges Rs 60, CGST Rs 5.40, SGST Rs 5.40. Total fees Rs 560, GST Rs 100.80.
Banks issue a tax invoice or an invoice cum statement each month showing these lines. A registered business should give its GSTIN to the bank so the GST appears against it.
Claiming credit on bank charges
Bank charges paid by a registered business for business accounts are input services, and the GST can be claimed as credit. The bank uploads the details in its returns, which flow into the business's GSTR-2B. If the GSTIN is not updated with the bank, the GST is billed as a consumer charge and cannot be claimed.
Frequently asked questions
What is the hsn code for bank charges?
Bank charges fall under SAC 9971, with fees at 18%.
Is GST charged on credit card EMI?
The interest part of an EMI is exempt. Processing fees and other charges are taxed at 18%.
Is GST charged on loan interest?
No. Interest on loans and deposits is exempt.
What is SAC 99715?
99715 covers services auxiliary to financial services, at 18%.
Can a business claim ITC on bank charges?
Yes, if the charges relate to business accounts and the bank has the business's GSTIN.