What changed
RBI revised and updated the master circular on conduct of government business by agency banks, consolidating instructions issued up to March 31, 2021. The previous circular from July 1, 2020, was replaced. Key updates include clarifications on eligibility for stamp duty collection and exclusion of own tax liabilities from commission claims.
What it means for you
Agency banks must align their commission claims with the updated circular to ensure compliance. Transactions like own tax payments and certain state borrowings remain ineligible for commission. Banks collecting stamp duty via physical or e-challan can claim commission only if they don't charge the public or receive separate remuneration from the state government.
What you must do
- Review the updated master circular and ensure your bank's agency commission claims comply with the new instructions.
- Exclude own tax liabilities (TDS, corporation tax) from commission claims and provide a certificate to RBI confirming this.
- Verify that stamp duty collection processes do not involve charging the public or receiving separate state government remuneration to remain eligible for commission.
- Update internal guidelines for branches handling government business to reflect the consolidated instructions.
Who it affects
All agency banks appointed under Section 45 of the RBI Act, 1934, Branches handling government revenue receipts, payments, and pension disbursements, Banks involved in Small Savings Schemes and stamp duty collection
Are state government borrowings from financial institutions eligible for agency commission?
No, short-term or long-term borrowings of state governments raised directly from financial institutions and banks are not eligible for agency commission, as they are not considered general banking business.
Can we claim agency commission for collecting stamp duty via e-challan?
Yes, if the bank collects stamp duty through physical or e-mode (challan based) and does not charge the public or receive separate remuneration from the state government for this work, it is eligible for agency commission.
What happens if we pay our own tax liabilities through our branches?
Such transactions must be indicated separately in the scroll and are not eligible for agency commission. Banks must provide a certificate excluding own tax liabilities from commission claims.