GST applicability on Interest Subvention receives from nationalized bank

[Sandeep Anand]

Sir,

Require a clarification whether the GST is applicable on interest subvention received from a bank for reducing the effective interest of Working capital loan (Packing credit facility). Any section or case laws supporting the above fact

Also there is a clarification required that, since GST is not applicable for Interest on working capital loan, whether the subvention received for the same is applicable for GST

AI Summary

GST Not Applicable on Interest Subvention from RBI's Interest Equalization Scheme; Considered Central Government Subsidy A discussion on a forum addressed whether GST applies to interest subvention received from a nationalized bank under the RBI's interest equalization scheme. The query sought clarification on GST applicability, given that GST is not levied on interest from working capital loans. A respondent explained that interest subvention is considered a subsidy, which is not subject to GST if provided by the Central Government. Since the subsidy is borne by the Central Government and banks act merely as intermediaries, GST is not applicable. The discussion concluded with gratitude for the clarification provided.