TaxTMI 
TaxTMI 
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 ?
RCM on notional loan processing fees
14 Dec 2022 
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Reverse charge on notional loan processing fees may arise where administrative services are supplied by an overseas parent.
Whether GST under reverse charge applies to a notional loan processing fee from an overseas parent is debated. One view treats such fees as administrative services distinct from interest and taxable under reverse charge with input tax credit available. The opposing view contends that absent a demonstrable supply-mere provision of a loan by the parent-there is no basis to impute a notional processing service and therefore no RCM liability for the subsidiary. (AI Summary)
Whether GST under reverse charge applies to a notional loan processing fee from an overseas parent is debated. One view treats such fees as administrative services distinct from interest and taxable under reverse charge with input tax credit available. The opposing view contends that absent a demonstrable supply-mere provision of a loan by the parent-there is no basis to impute a notional processing service and therefore no RCM liability for the subsidiary. (AI Summary)