GST on interest on loan

[Kaustubh Karandikar]

PQR (Mexico) is a Subsidy of XYZ (India). Loan had been given in US$ by XYZ (India) to PQR (Mexico) and the principal amount along with interest is paid back to XYZ (India) again in US $ and the same is deposited in the Indian bank having foreign currency account. Is XYZ required to pay GST on the interest amount received from PQR?

[Narendra Nimmala]

Services by way of extending loans is exempt vide entry 27 of Notification No. 12/2017- Central Tax (Rate). XYZ is not liable to pay GST

AI Summary

GST exemption for loan services: interest received on a corporate loan repayment is not taxable under the loan-services exemption. Services by way of extending loans are exempt from GST; interest received on a repaid loan deposited in a foreign currency account is not subject to GST where it falls within the loan-extension exemption, and the lender is not required to pay GST on those interest receipts.