1. Title: GST Rate & HSN Code for Financial Services – Chapter 9
Introduction:
Financial services play a crucial role in the economy and are a vital part of any business or individual’s financial planning. Chapter 9 of the Goods and Services Tax (GST) Act deals with the classification and taxation of financial services. In this blog post, we will discuss the HSN codes and GST rates applicable to financial services under Chapter 9.
HSN Codes for Financial Services Chapter 9 – List and Description:
HSN codes are used for the classification of goods and services for taxation purposes. The HSN code for financial services under Chapter 9 is divided into two categories: 9991 for services provided by banks and other financial institutions and 9992 for services provided by non-banking financial companies (NBFCs).
Here is a detailed table of HSN codes and their corresponding descriptions for financial services under Chapter 9:
HSN Code | Description
— | —
9991 | Services provided by banks and other financial institutions
9992 | Services provided by non-banking financial companies (NBFCs)
GST Rates on Financial Services Chapter 9:
The GST rates for financial services under Chapter 9 are based on the HSN codes mentioned above. The table below shows the GST rates for financial services:
HSN Code | Product Description | GST Rate
— | — | —
9991 | Services provided by banks and other financial institutions | 18%
9992 | Services provided by non-banking financial companies (NBFCs) | 18%
Key Products Covered Under Chapter 9:
Some of the key products covered under Chapter 9 of the GST Act include bank services such as loans, deposits, and credit facilities, as well as services provided by NBFCs such as leasing, hire purchase, and investments.
HSN Code Compliance for Chapter 9 Products:
It is crucial for businesses to comply with the correct HSN codes for financial services under Chapter 9 to avoid any tax-related discrepancies. The HSN code for financial services provided by banks and other financial institutions is 9991, while the code for services provided by NBFCs is 9992.
GST Rates Applicable to Financial Services:
The table below provides a detailed overview of the GST rates applicable to financial services under Chapter 9:
HSN Code | GST Rate
— | —
9991 | 18%
9992 | 18%
GST Exemptions under Chapter 9:
Some financial services are exempt from GST or fall under the 0% tax slab. These include services provided by credit rating agencies, stockbrokers, portfolio managers, and mutual fund agents.
HSN Code Format for Chapter 9:
The HSN code structure for financial services under Chapter 9 is as follows:
– 2-digit code for Chapter 9: 99
– 4-digit code for financial services: 9991 (banks and other financial institutions) and 9992 (NBFCs)
– 6-digit code for specific services: 9991 for services such as loans, deposits, and credit facilities provided by banks and other financial institutions, and 9992 for services such as leasing, hire purchase, and investments provided by NBFCs.
– 8-digit code for sub-services: Not applicable for financial services under Chapter 9.
Input Tax Credit (ITC) for Chapter 9 Products:
Businesses can claim input tax credit (ITC) for goods and services used for providing financial services under Chapter 9, such as office equipment, rent, and software. However, ITC is not allowed for goods or services used for exempt financial services.
Common Mistakes in Classification and How to Avoid Them:
Some common mistakes in the classification of financial services under Chapter 9 include confusion between the HSN codes for banks and NBFCs, incorrect usage of codes, and confusion in GST rates. To avoid these mistakes, businesses should ensure that they are using the correct HSN codes for the specific services they provide and stay updated with any changes in GST rates.
HSN Code Usage for Small vs Large Businesses:
Small businesses with an annual turnover of less than Rs. 1.5 crores are not required to use HSN codes for their invoices. However, they are required to use 4-digit HSN codes if they are providing services under Chapter 9. Large businesses with an annual turnover of more than Rs. 1.5 crores are required to use 6-digit HSN codes for their invoices.
Tips for Traders, Exporters, and Importers:
Traders, exporters, and importers should be careful while using HSN codes for financial services under Chapter 9 to avoid any issues with tax compliance. They should also ensure that the correct GST rates are applied to the services they provide. It is advisable to consult with a financial expert for accurate classification and documentation.
Conclusion:
In conclusion, financial services under Chapter 9 play a significant role in the economy and are subject to GST rates and HSN codes. It is crucial for businesses to comply with the correct codes and GST rates to avoid any tax-related discrepancies. Regular updates on changes in HSN codes and GST rates should be noted to ensure accurate classification and documentation.
FAQs:
Q: What is the HSN code for financial services under Chapter 9?
A: The HSN code for financial services under Chapter 9 is divided into two categories: 9991 for services provided by banks and other financial institutions and 9992 for services provided by non-banking financial companies (NBFCs).
Q: What are the GST rates for financial services under Chapter 9?
A: The GST rates for financial services under Chapter 9 are 18% for both services provided by banks and other financial institutions (HSN code 9991) and services provided by NBFCs (HSN code 9992).
Q: Can businesses claim input tax credit for goods and services used for providing financial services under Chapter 9?
A: Yes, businesses can claim input tax credit (ITC) for goods and services used for providing financial services under Chapter 9, except for goods or services used for exempt financial services.
Q: Do small businesses need to use HSN codes for financial services under Chapter 9?
A: Yes, small businesses with an annual turnover of less than Rs. 1.5 crores are required to use 4-digit HSN codes for financial services under Chapter 9.
