Srinagar: The Jammu and Kashmir Bank (J&K Bank) on Wednesday reported that it has received a Goods and Services Tax (GST) notice for over Rs 16,000 crore. The notice, issued by the joint commissioner of the central GST Commissionerate in Jammu, comprises a GST demand of Rs 8,130.66 crore, along with an equivalent penalty.
The bank asserted that it has taken legal action, as they feel the financial institution has a strong case on merit. The bank, in its statement, said: "We believe the demand order will have no material impact on the bank’s financials, operations, or other activities."
The bank further said, "The notice relates to the GST that is applied to interest receivable between the company's corporate headquarters and its branches under the transfer pricing mechanism (TPM). The time frame under consideration is July 2017–March 2020, when money from a common pool was regarded as financial services."
While highlighting that J&K Bank is a single legal entity, the statement said that "it is required to prepare its financial statements under applicable regulatory laws." "All TPM entries are purely notional. When financial statements are prepared at the entity level, income and expenditures from TPM interest distribution cancel each other out," the bank said, adding, "J&K Bank, like other banks, does not consider TPM transactions as financial services subject to GST law," it added.
Meanwhile, the shares of J&K Bank fell 1.81% on Wednesday, closing at Rs 101.44.
