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 »
Whether assignment or sale of secured or unsecured debts is liable to GST? Section 2(52) of the CGST Act, 2017 defines ‘goods’ to mean every kind of movable property other than money and securities but includes actionable claim. Schedule III of the CGST Act, 2017 lists activities or transactions which shall be treated neither as a… Read More »
Would income from Commercial Paper (CP) or Certificates of Deposit (CD) be taxable under GST? Commercial Paper (‘CP’) and Certificate of Deposit (‘CD’) are unsecured money market instruments which are issued in the form of a promissory note or in a dematerialized form through any of the depositories approved by and registered with SEBI. CPs… Read More »
What is the nature of income earned / expended in instruments like repos and reverse repos and is such income taxable under GST? Section 45U(c) of the RBI Act, 1934 defines ‘repos’ as an instrument for borrowing funds by selling securities with an agreement to repurchase the securities on a mutually agreed future date at… Read More »
Would forward contracts in commodities or currencies be within the ambit of definition of ‘supply’? A forward contract is an agreement, executed, to purchase or sell a pre- determined amount of a commodity or currency at a pre-determined future date at a pre-determined price. The settlement could be by way of actual delivery of underlying commodity/currency or… Read More »