GST on penal interest: taxable when part of a goods supply but exempt if genuine interest charged by a lender. The circular clarifies that penal interest levied on delayed EMI payments is taxable when it forms part of the value of a supply of goods, but where penal interest is charged by a lender as genuine consideration for extending a loan it qualifies as interest and is exempt; service fees or other charges by the lender do not qualify as exempt interest and remain taxable.
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 on penal interest: taxable when part of a goods supply but exempt if genuine interest charged by a lender.
The circular clarifies that penal interest levied on delayed EMI payments is taxable when it forms part of the value of a supply of goods, but where penal interest is charged by a lender as genuine consideration for extending a loan it qualifies as interest and is exempt; service fees or other charges by the lender do not qualify as exempt interest and remain taxable.
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