9911796707
TMI BlogClarification regarding applicability of GST on additional / penal interestX X X X Extracts X X X X X X X X Extracts X X X X ..... cases where the EMI is not paid at the scheduled time, there is a levy of additional / penal interest on account of delay in payment of EMI. 2. Doubts have been raised regarding the applicability of GST on additional / penal interest on the overdue loan i.e. whether it would be exempt from GST in terms of Serial Number 27 of notification No. 47/ST-2, dated 30th June 2017 or such penal interest would be treated as consideration for liquidated damages [amounting to a separate taxable supply of services under GST covered under entry 5(e) of Schedule II of the Haryana Goods and Services Tax Act, 2017 (hereinafter referred to as the HGST Act) i.e. agreeing to the obligation to refrain from an act, or to tolerate an act or a situa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penal interest @ 1.25% per month for any delay in payment. 4. As per the provisions of sub-clause (d) of sub-section (2) of section 15 of the HGST Act, the value of supply shall include interest or late fee or penalty for delayed payment of any consideration for any supply . Further in terms of Serial Number 27 of notification No. 47/ST-2, dated the 30.06.2017 services by way of(a) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services) is exempted. Further, as per clause 2 (zk) of the notification No.47/ST-2, dated the 30.06.2017, 'interest' means interest payable in any manner in respect of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entry 5(e) of Schedule Il of the HGST Act i.e. agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act , as this levy of additional / penal interest satisfies the definition of interest as contained in notification No.47/ST-2, dated the 30.06.2017. It is further clarified that any service fee/charge or any other charges that are levied by M/s ABC Ltd. in respect of the transaction related to extending deposits, loans or advances does not qualify to be interest as defined in notification No.47/ST-2, dated the 30.06.2017, and accordingly will not be exempt. 6. Difficulty if any, in the implementation of this circular may be brought to the notice of the Department. ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
