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

Interest subvention subsidy borne by Central Government is not subject to GST when routed through banks.
GST liability on interest subvention depends on whether the subsidy is funded by the Central Government. If the subvention under an interest equalization scheme is borne by the Central Government and the bank only channels the payment, the subsidy does not constitute taxable consideration under the GST law; conversely, a subsidy funded by a non-government entity may be taxable.