GST ON INTEREST ON DELAYED PAYMENT

[ROHIT GOEL]

We have purchased Cigarettes for which payment has been made beyond due date of payment and therefore interest on delayed payment has been charged by company. Company has issued debit note where HSN code of cigarette is mentioned and description mentioned as Interest on delayed payment....

Whether it is correct treatment by company and how to treat it in our GST return??

[KASTURI SETHI]

Yes. The Company is correct in this aspect. As per Section 15 of CGST Act, 2017 interest on delayed payment is part of taxable value/transaction value(on which GST is to be computed and paid). In GST return declare the taxable value including interest on delayed payment.

Just for your information normal interest which we earn on our bank account is not to be treated part of taxable value.

[Alkesh Jani]

Sir, I agree with the views of Sh. Kasturiji, the issued is very clear and Section 15(d) of CGST Act,2017 clearly states that interest or late fee or penalty for delayed payment of any consideration for any supply is required to be included for valuation purpose.

[Ganeshan Kalyani]

Section 15 (2)(d) of CGST Act provides that transactional value shall include interest or late fee or penalty for delayed payment of any consideration for any supply; and....

AI Summary

GST valuation includes interest on delayed payment, requiring suppliers to include that interest in taxable value and returns.
Interest charged for delayed payment on a supply must be included in the taxable value for GST; such interest, late fee or penalty forming part of consideration should be aggregated with the transaction value and declared in GST returns, while ordinary bank interest unconnected to the supply is excluded.