gst

How do I claim Input Tax Credit for the transaction fees charged by Razorpay? 

Payment Gateways such as Razorpay collect Transaction Fees from its customers on payments received towards the invoices raised in Zoho Books. Razorpay also sends out a consolidated invoice of the charges and taxes applied on the transactions, which you can use to claim the Input Tax Credit while filing your GST returns. 

Let’s take an example where you are a GST registered business owner and you collect payments from your customers via Razorpay. Say you raise an invoice for ₹10000 and Razorpay charges you a transaction fees of ₹200 (2%) and 18% GST on the fees. 

The amount received would be the balance after Razorpay deducts the transaction fees. In such cases, you will have to record the total transaction fees as a separate Expense and manually add Journal Entries for the same. 

To record the Expense, 

  • Go to the Expenses module from the Purchases dropdown.
  • Click the + New button to record a new expense. 
  • Select the Expense account as Bank Fees and Charges
  • Select Razorpay as your Vendor
  • Mark the expense as Tax Inclusive
  • Click Save.

Note: Razorpay charges transaction fees only on transactions over ₹2000 and the tax amount populated might not match with the actual tax amount. Click the Edit icon near the tax amount to update the actual amount.

Update tax

To record this tax expense you will also have to add journal entries for the total transaction fees charged by Razorpay. 

To add a Manual Journal:

  • Go to Manual Journal module in the Accountant tab.
  • Click the + New button to create a new journal.
  • Fill in the required fields such as Date and Notes. 
  • Add the Journal entry as follows: 
    • Debit the respective Bank account through which you received the payment.
    • Credit the Bank Fees and Charges account.
  • Click Save.

Manual journal

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