The National Payments Corporation of India (NPCI) on December 20, 2022, issued notification regarding Account Verification Service and GST on Interchange Fees. NPCI submits claim letters to respective government entities on a monthly/quarterly basis. The department after scrutinizing the claim letters remits consolidated amount to NPCI (Switching Fees of NPCI along and Interchange Fees of the destination banks after deduction of TDS on GST or Income Tax if applicable). The amount thus received by NPCI is then distributed to the destination banks accordingly.
NPCI will remit the interchange amount received inclusive of GST and net of TDS, if any, after retaining its share of switching fees. It is the responsibility of the destination banks to raise necessary invoice and discharge the GST liability with the Government.
