What is the location of the supplier in case of banking and other financial services where multiple locations are involved in providing the services to a customer? Banking services emanate from the bank account opened by a customer with the branch of a bank or through a contractual relationship between the branch of a bank and the… Read More »
Which services will qualify as services provided to ‘account holder’ as per Section 13(8) of the IGST Act, 2017? The place of supply of services supplied by a banking company located in India to account holders located outside India is the location of the service provider i.e. banking company. “Account” has been defined in Explanation (a) to… Read More »
Would imposition of a fine or penalty for violation of a provision of law be a consideration for the activity of breaking the law, making such activity as service? No. Fines and penalties are imposed for breaking the law by a person. They are not in the nature of a consideration for an activity and hence,… Read More »
Where GST is charged on a supply of service and the amounts due from the customer become irrecoverable as a bad debt in commercial practice, would such GST paid on accrual basis be refundable to the service provider by the Government? The adjustment of GST already paid is allowed only by way of issuance of credit /debit… Read More »
Whether interest on a finance lease transaction is taxable under GST? A finance lease is a method of borrowing against the asset. The interest represents the time value of the money expended by the Bank in financing the asset. Services by way of extending deposits, loans or advances in so far as the consideration is represented… Read More »
Would charges for late payment of dues on credit card outstanding be chargeable to GST? Yes. The exemption from levy of GST on interest specifically excludes interest charged on outstanding credit card balances as per serial no. 27 of the table of notification No. 12/2017-Central Tax (Rate) dated 28th June, 2017, as amended. Q 46… Read More »
Is GST required to be paid on additional interest charged in case of default in instalment payment by the customer? As per Section 15(2) of CGST Act, 2017, the value of supply includes, inter alia, interest for delayed payment of any consideration for any supply. Additional Interest charged for default in payment of instalment in… Read More »
Is interest on debt instruments exempt from GST? Yes. As debt instruments such as debentures, bonds etc. are in the nature of loans, interest thereon will be exempt from GST. Q 44 of GST FAQs on Financial Services Sector published by CBIC
To what extent is invoice discounting or cheque discounting or any other similar form of discounting exempt under GST? Discounting of invoices or cheques falls within the meaning of “services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount”. Such discounting is exempt from… Read More »
If any service charges or administrative charges or entry charges are recovered in addition to interest on a loan, advance or a deposit, would such charges be also a part of the exemption? No. The services of loans, advances or deposits are exempt in so far as the consideration is represented by way of interest or discount.… Read More »