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of <h1>GST Clarification: Penal Interest on Delayed EMI Taxable for Goods, Potentially Exempt for Loans Under Notification 12/2017.</h1> The circular clarifies the applicability of GST on additional or penal interest related to delayed EMI payments. It distinguishes between two cases: when penal interest is part of the value of a taxable supply, such as a mobile phone, it is subject to GST; however, when penal interest is charged on a loan transaction, it may be exempt under notification No. 12/2017-Central Tax (Rate). The notice emphasizes that penal interest does not fall under entry 5(e) of Schedule II of the CGST Act and instructs officials and trade bodies to disseminate this information.
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