Goods and Services Tax – Started By: – Shivang Sharma – Dated:- 7-11-2017 Last Replied Date:- 8-11-2017 – The definition of Services under CGST Act specifically excludes money but includes activities relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged.Banks are charging GST on Processing charges, etc as they are activities in relation to use of money, which is correct. But they are also charging GST on interest component of loan EMI's. The point here is interest charged by Banks is only for the use of money and use of money is not a service as per the definition of Services. The Servi
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when supply of goods or services is complete only after charging of interest, interest forms the part of taxable value.In routine, no GST is applicable on interest. It is further clear from the following extract and example :- GST – Time of Supply in GST – Procedure for – Reply By Ganeshan Kalyani – The Reply = I agree with the views of the experts. Also, i agree with the querist. GST is not leviable on the interest component. It is charged on bank charges. If your bank is charging GST then it would be on bank charges. However, it is advisable to get clarity from the bank. Thanks. – Reply By Shivang Sharma – The Reply = Many thanks for your reply experts… I don't accept the view that Banks action is covered by Section 15(2)(d) – Value
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. It was also not chargeable to Service Tax earlier i.e. pre-GST-era. GST is levaiable on the amount of interest only if interest is paid on account of default in payment. Your attention is also drawn to Sh.Maraippan Govindarajan's reply wherein he has clearly linked interest to penalty i.e. interest by virtue of default payment. When default occurs time of supply is complete only after payment of interest and in that situation interest forms the part of taxable value. Otherwise not at all. – Reply By Shivang Sharma – The Reply = Dear Sethi ji, Thank You for the clarification. My second message was for the post by Mr. Rajkumar Shukla ji. – Reply By Ganeshan Kalyani – The Reply = Agreed with Sri Kasturi Sir. Thanks. – Discussion-Forum –
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