RCM on notional loan processing fees

[RS SIMHA]

We have External Commercial Borrowings from the Overseas Parent Company. The question is do we need to pay GST under RCM on a notional loan processing fees ?

AI Summary

Debate on GST under RCM for Notional Loan Processing Fees in External Commercial Borrowings; Does It Constitute a Supply? A discussion on whether GST under the Reverse Charge Mechanism (RCM) applies to notional loan processing fees for External Commercial Borrowings from an overseas parent company. One participant argues that such fees, being administrative and distinct from interest, are liable for GST under RCM, with no financial loss due to tax credit. Another participant contends that GST liability arises only with actual supply, and notional fees between related parties do not constitute a supply. They argue that there is no legal requirement for a loan processing fee, suggesting no GST liability under RCM for these notional fees.