Bank Charges & GST Reconciliation: BRS Guide India (2026)

Commercial bank charges—such as processing fees, loan documentation fees, and Letter of Credit (LC) commissions—are standard business expenses. However, because banks deduct these fees directly from current accounts, finance teams often record them as net withdrawals, overlooking the GST component.

Failing to record these splits results in lost **18% Input Tax Credit (ITC)** opportunities, costing large corporations lakhs in tax leakages annually.

1. Common Bank Charge Slabs and GST Treatment

Different commercial banking services carry standard GST liabilities:

2. Case Study: Booking Remittance Fees with GST Splits

A business initiates an outward trade remittance to a supplier. The bank processes the transfer and deducts **₹2,950** from the current account, representing ₹2,500 base commission plus 18% GST (₹450).

The correct double-entry voucher required to book this transaction is:

Debit:  Bank Charges Expense Account   ₹2,500
Debit:  CGST Input Tax Ledger          ₹225
Debit:  SGST Input Tax Ledger          ₹225
Credit: Current Bank Account                      ₹2,950

Recording the GST split ensures that the transaction matches the bank's GSTR-1 entry during GSTR-2B reconciliations.

3. Statutory Auditing Protocols for Bank Charges (u/s 143(3))

During statutory corporate audits, CAs perform dedicated verification checks on bank withdrawals. Since bank fees are auto-deducted, auditors check that every debited expense is supported by either a specific debit advice or a monthly consolidated tax invoice generated by the bank.

Auditors also run ledger range queries u/s 143(3) to verify that no personal banking expenses or unauthorized fee structures are capitalized under indirect expense groups.

4. Form 3CD Compliance & TDS Validation on Bank Commissions

Under Clause 34 of Form 3CD (Tax Audit Report), auditors must verify if TDS was deducted on all payments requiring withholding. While standard interest charges are exempt, specific bank commissions (such as BG/LC underwriting commission or advisory fees) may trigger TDS under Section 194H or 194J.

Tax audits verify that companies maintain complete documentation showing exceptions or appropriate TDS deductions on these commission fees to prevent disallowances.

5. Reconciling Monthly Bank Consolidated Invoices

Most major commercial banks do not issue physical tax invoices for small individual transactions like IMPS fees. Instead, they compile all monthly charges into a single, multi-page consolidated tax invoice and file it as one transaction in GSTR-1.

To reconcile these, modern finance teams upload the bank PDF statement to automated matching engines. The engine reads individual daily statements, aggregates the fees, compares the totals with the bank's monthly consolidated tax invoice, and flags any discrepancy before final filing.

6. Resolving Bank Charge Mismatches in GSTR-2B

Reconciling bank charges in GSTR-2B presents unique challenges:

• Missing Customer GSTIN: If the bank records the transaction under a consumer PAN instead of your corporate GSTIN, the credit will not flow to GSTR-2B.
• Aggregated Filings: Banks sometimes group monthly charges into a single GSTR-1 entry, causing mismatches with individual ledger entries.
• State Allocation Errors: Banks may apply IGST instead of CGST/SGST if their registration state differs from your corporate branch.

7. Automated Entries during Tally BRS

To manage bank fees during reconciliation: