GST applicability on penal interest: taxable when included in sale consideration, exempt when charged by lender as interest. The circular distinguishes two scenarios: penal interest charged by a seller on instalment sales is included in the value of the taxable supply of goods and is subject to GST, whereas penal interest charged by a separate lender on a loan repayment qualifies as interest under the exemption notification and is not subject to GST; non-interest service fees levied by lenders are not exempt.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
GST applicability on penal interest: taxable when included in sale consideration, exempt when charged by lender as interest.
The circular distinguishes two scenarios: penal interest charged by a seller on instalment sales is included in the value of the taxable supply of goods and is subject to GST, whereas penal interest charged by a separate lender on a loan repayment qualifies as interest under the exemption notification and is not subject to GST; non-interest service fees levied by lenders are not exempt.
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