GST to be levied on Penal Interest of delayed payment of EMI : AAR

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GST to be levied on Penal Interest of delayed payment of EMI : AAR | Authority of Advance Ruling Maharashtra in matter of Bajaj Finance Limited has ruled out thatGST is to be levied on Penal Interest of delayed payment of EMI. It ruled out thatthe activity of collecting penal interest by the Applicant i.e. Bajaj Finance Limited would amount to a taxable supply under the GST regime.

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GST to be levied on Penal Interest of delayed payment of EMI : AAR

ORDER

( under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)

NO. GST-ARA-22/2018-19/B-85

Mumbai, dt. 06.08.2018

For reasons as discussed in the body of the order, the questions are answered thus,- Question 1.:- Whether the Penal Interest is to be treated as interest for the purpose of exemption under Sr. No. 27 ofNotification No. 12/2017 Central Tax (Rate) dated 28.06.2017, Sr. No. 27 of Maharashtra State Notification No. 12/2017-State Tax (Rate) dated 29.06.2017, and Sr. No. 28 ofNotification No. 9/2017-Integrated Tax (Rate) dated 28.06.2017 Answer:- Answered in the negative. Question 2.:- If the answer to the above is negative, whether the activity of collecting penal interest by the Applicant would amount to a taxable supply under the GST regime Answer:- Answered in the affirmative. The said activity squarely falls under clause 5(e) of the Schedule II of the GST Act, 2018 and therefore such amounts received, would attract tax liability under GST laws.