What changed
RBI revised and updated the Master Circular on Conduct of Government Business by Agency Banks - Payment of Agency Commission, replacing the April 1, 2023 version. The new circular consolidates all instructions issued up to March 31, 2024, without introducing new policy changes.
What it means for you
Agency banks must align their claims and processes with the updated circular to ensure compliance. The circular clarifies eligibility for commission on stamp duty collections and excludes own tax payments and franking vendor activities, impacting claim submissions.
What you must do
- Review the updated Master Circular and ensure your agency bank's procedures match the consolidated instructions.
- Exclude own tax liabilities (TDS, Corporation Tax) from agency commission claims and submit the required certificate.
- Verify that stamp duty collections via physical or e-challan are claimed correctly, and avoid claims for franking vendor activities.
- Update internal training materials for staff handling government business to reflect the latest circular.
Who it affects
All agency banks appointed under Section 45 of the RBI Act, 1934, Branches handling government revenue receipts, payments, and pension transactions, Banks involved in Small Savings Schemes and Special Deposit Scheme transactions
Are agency banks eligible for commission on stamp duty collected as franking vendors?
No, if the bank acts as a Franking Vendor and collects stamp duty from the public, it is not eligible for agency commission, as the State Government pays separate commission for that role.
Can agency banks claim commission for paying their own tax liabilities?
No, own tax liabilities (like TDS or Corporation Tax) paid through the bank's own branches or other agency banks are not eligible for agency commission, and banks must certify their exclusion from claims.
What transactions are eligible for agency commission under this circular?
Eligible transactions include revenue receipts and payments for Central/State Governments, pension payments, and any other work specifically advised by RBI as eligible for commission.