Government answers Questions on GST

The complexity of GST has made it a very confusing thing to understand.The government has finally issued a detailed FAQ, with questions on banking, insurance and capital market’s enquiries on issues relating to the industry such as levy of tax on free services.

GST on exit load of mutual funds:

Exit load in the form of a fee is liable to GST. Even if the exit load is in the form of units, which implies that the received money is later converted to NAV units.

On loans being taken over from one bank to another:

GST will be chargeable on any transaction leveled for such takeover, but not on the interest.

Additional interest charged in case of default in instalment payment:

The additional interest charged in case of default in instalment payment is liable to GST as per Section 15(2) of CGST Act, 2017 which states that value of supply includes interest for delayed payment of any consideration for any supply.

On late payment of dues on credit card payment:

GST is applicable on these charges. The levy of GST on interest excludes interest charged on outstanding credit balance.

Banking services:

GST is not applicable on ATMs. If services are provided by multiple branches, the branch where the account is opened is to pay GST and the remaining branches will provide services to the main branch.

NRIs:

NRI’s insurance policies are liable to GST when the payment is made from non-resident accounts in Indian Rupees.

Investors:

Secularisation, future contracts, derivatives and forward taxes contracts are not liable to GST as long as they do not entail actual delivery of commodities,