GST on Interest component of Loan EMI
Query (Issue) Started By: – Shivang Sharma Dated:- 7-11-2017 Last Reply Date:- 8-11-2017 Goods and Services Tax – GST
Got 8 Replies
GST
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.
\nBanks 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<\/p>\n
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Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n ed that where interest is related to time of supply, GST is applicable on component of interest. In other words, 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 :- = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n Sharma Ji, = = = = = = = =<\/p>\n Plain text (Extract) only<\/strong> = = = = = = = =<\/p>\n","protected":false},"excerpt":{"rendered":" GST on Interest component of Loan EMI Query (Issue) Started By: – Shivang Sharma Dated:- 7-11-2017 Last Reply Date:- 8-11-2017 Goods and Services Tax – GSTGot 8 RepliesGSTThe 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 … Continue reading “GST on Interest component of Loan EMI”<\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-8581","post","type-post","status-publish","format-standard","hentry"],"_links":{"self":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/8581","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8581"}],"version-history":[{"count":0,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=\/wp\/v2\/posts\/8581\/revisions"}],"wp:attachment":[{"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8581"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8581"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/goodsandservicetax.in\/GST\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8581"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
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\nGST – Time of Supply in GST – Procedure for
\nReply By Ganeshan Kalyani:
\nThe Reply:
\nI 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.
\nReply By Shivang Sharma:
\nThe Reply:
\nMany thanks<\/p>\n
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\nPl. re-read all replies. Interest on loan is not chargeable to GST in a normal way as already explained in my reply above.. 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.
\nReply By Shivang Sharma:
\nThe Reply:
\nDear Sethi ji, Thank You for the clarification. My second message was for the<\/p>\n
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