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Agency Commission For Direct Tax Collection Under Tin 2.0 Regime

By - Pooja Sirnapelly on December 5, 2022

Reserve Bank of India had issued a notification dated 14.11.2022 vide Circular No. RBI/2022-23/136 CO.DGBA.GBD. No. S957/43-33-005/2022-2023[1] being Central Bank of India, RBI has focused on the agency banks to succumb their claims for commission in the set format to CAS (Central Account Section) Nagpur in respect to Central Government transactions.

What are Agency Banks?

An Agency Bank is also called an Agent Bank. It performs services in some capacity on behalf of a business. It can provide various services for businesses seeing to expand internationally. These Agent Banks primarily act in support of another bank or peer of banks, but they can act on behalf of a person or business.

The Bank Agency receive commission as a payment from the Reserve Bank of India for managing the government transaction. The master circular on the conduct of government business by Agency Banks and payment of Agency Commission dated 01.04.2022, related to claiming agency commission as mentioned in para 21 of the captioned master circular.

What is an agency commission?

The Agent Banks receive a commission from the Reserve Bank of India for handling Government Business.

Further, Agency Banks are advised to carefully seek instructions published by the Reserve Bank of India from timely concerning transactions which are not eligible for an Agency Commission and submit their claims for an Agency Commission accordingly. All Agent Banks claiming Agent Commission certify that Agency Commission is not claimed on ineligible transactions.

Furthermore, Agency Commission claims with respect to GST receipt transactions and transactions related to Direct Tax Collection under TIN 2.0 regime will be settled at Mumbai Regional Office of Reserve Bank of India only and accordingly all agency banks, authorized to collect GST and Direct Tax Collection under TIN 2.0, are advised to submit their agency commission claims pertaining to the respective receipt transactions at Mumbai Regional Office only. 

The Direct Tax about the agency transaction under Online Tax Accounting System (OLTAS) will continue to be settled at the Central Account Section, Nagpur, RBI. The approved formats for claiming Agency Commission for all Agency Banks or Agent Banks and respective and distinctive sets of certificate are to be signed by the Branch Officials & Chartered Accountants (CA) or Cost Accountants are mentioned in Annex 2, Annex 2A and Annex 2B separately of the Master Circular dated 01.04.2022. These certificates will be an extension to the Certificate from a Chief General Manager (in charge of government business) to the result that there are no pension transactions to be credited or delays in crediting regular pension arrears thereof.”

In Conclusion, the provision issued by the RBI concerning the Agency Commission for Direct Tax Collection, it is pertinent to observe that the RBI has modified para 21 in the master circular, this is for the all Agency Banks. As mentioned, in the circular all the Agent Banks will have to submit the claim for the Agent Commission in respect to handling the services of Government and Commission.


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