<h1>GST exemption clarified: penal charges by regulated lenders are not taxable and small value payment settlements are exempted.</h1> GST does not apply to penal charges levied by RBI regulated banks and NBFCs, as these charges are treated as contractual breach charges rather than taxable consideration. CBIC further clarifies that RBI regulated Payment Aggregators qualify for a GST exemption limited to the payment settlement function for single transaction card payments within a small value threshold, while Payment Gateway services that only provide routing and do not handle funds remain outside this exemption.