GST on brand name usage baffles banks

Banks are facing uncertainty on the applicability of goods and services tax (GST) on the use of a common brand name of the bank by all its branches and subsidiaries, said two people privy to the development.

- Pavan Burugula

Certain lenders have started receiving GST notices regarding the use of the brand by the bank branches and subsidiaries, people cited above said.

The development follows several orders by the Authority for Advanced Rulings (AAR) of Tamil Nadu, Maharashtra, and Karnataka specifying that each entity within a bank with a separate GST number will be considered a distinct entity for tax purposes.

The tax department is of the opinion that it constitutes free service offered to related parties, hence, is subject to GST.

If this is recognized as a service, banks will be required to arrive at a value regarding the cost of such services and GST will be applicable on such cost.

An email sent to the finance ministry seeking comments, remained unanswered.