GST on penal interest: penal interest forming part of goods' consideration is taxable, financier's loan interest may be exempt. Where a delayed-payment charge forms part of the consideration for a taxable supply of goods, the penal interest must be included in the value of supply and is taxable; where penal interest is charged by an independent financier for a loan, that interest is covered by the exemption for services extending loans or advances and is not subject to GST. Penal interest qualifies as 'interest' under the notification and is not a separate Schedule II service, while separate non-interest fees charged by the financier are 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: penal interest forming part of goods' consideration is taxable, financier's loan interest may be exempt.
Where a delayed-payment charge forms part of the consideration for a taxable supply of goods, the penal interest must be included in the value of supply and is taxable; where penal interest is charged by an independent financier for a loan, that interest is covered by the exemption for services extending loans or advances and is not subject to GST. Penal interest qualifies as "interest" under the notification and is not a separate Schedule II service, while separate non-interest fees charged by the financier are taxable.
Full Summary is available for active users!
Note: It is a system-generated summary and is for quick reference only.
TaxTMI 
of 
Join Channel
TaxTMI 
