gst treatment savings deposit

[Madhavan iyengar]

A NBFC receives deposits like savings bank from customers and pays interest on the said deposit placed minimum deposit is ₹ 500 /- however the customer is required to maintain the balance of ₹ 500 /- if the balance falls short of ₹ 500/- then the NBFC will write back the amount below ₹ 500/- after 2 years and it will be treated as income and then transferred to reserve account

query whether this income ie deposit not paid back to customer which will be written back by NBFC will it be liable for gst

AI Summary

Tolerating an act: write back of NBFC customer deposits treated as a taxable supply under GST by some practitioners.
Whether amounts retained by an NBFC for failure to maintain minimum balance and later "written back" as income are taxable under GST: one view treats such retention as a forfeiture or penalty constituting a taxable supply of service (analogous to bank non maintenance charges), while others question whether a service element exists when the underlying deposit transaction may be exempt and call for formal clarification.