QUESTION
Whether GST is applicable on interest income against Letter of Credit for goods charged by the supplier / exporter as per their agreement.
ANSWER
FACTS OF THE CASE:
GST applicability on interest income against Letter of Credit for goods charged by the supplier / exporter as per their agreement.
LAW APPLICABLE:
Notification No. 12/2017 Central Tax (Rate)
| 27 | Heading 9971 | Services by way of' (a) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services); (b) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers. |
Nil | Nil |
(zk) "interest" means interest payable in any manner in respect of any money borrowed or debt incurred (including a deposit, claim or other similar right or obligation) but does not include any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised
INTERPRETATION:
Notification No. 12/2017 Central Tax (Rate) vide s.no. 27 exempts Services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services);
CONCLUSION:
Notification No. 12/2017 Central Tax (Rate) vide s.no. 27 exempts Services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services); (Reply dt. 19/05/2022)