GST On Penalty Charges: If your loan EMI is late or credit card payment is late, then a penalty is imposed by the bank and NBFC. For example, if you were charged a penalty of Rs 1000, then you had to pay Rs 180 GST on it.
But now this rule has changed. Yes, the Central Board of Indirect Taxes and Customs (CBIC) said that GST will not be levied on the penalty imposed by banks and NBFCs. Penalty means that if you have violated any rule, then you have to pay extra money in such a case.
There is no GST on transactions up to Rs 2000
Apart from this, CBIC also clarified through a circular that GST will not be levied on transactions up to Rs 2,000 through payment aggregators on online platforms. CBIC clarified that GST will not be levied on the penalty amount. CBIC said that this decision has been taken as per the recommendation of the 55th GST Council. The GST Council includes representatives of the Central Government and all the State Governments.
When is the penalty imposed?
Penalty is imposed by banks and NBFCs when your loan EMI or credit card payment is late. This penalty is imposed when you are not able to pay the loan installment on time by not following the rules. In this situation, the bank imposes a penalty on the customer. Till now, the customer has to pay 18 percent GST on this penalty amount. This decision of CBIC will provide relief to both the bank and the customers.
What will be the benefit?
Experts say that this decision of CBIC is very important. This will also help in reducing disputes between banks and customers. Due to this decision, GST will not be levied on the fines imposed by banks. Both the bank and the customer will benefit from this in monetary terms.
There is also benefit on shopping of less than 2000 rupees
Apart from this, some people and companies complained that if a person buys something less than 2000 rupees through an online platform using a credit or debit card or any other card, then GST should not be levied on it. In view of these complaints, clarification was given on the matter by CBIC. Payment aggregators help e-commerce sites and merchants to take money from customers. These shops do not need to create any separate system themselves.
These companies collect money from customers. After this, they send it to the shopkeepers’ accounts at the scheduled time. CBIC has also mentioned the rules of RBI. These rules explain the difference between payment aggregators (PAs) and payment gateways. CBIC clarified that if a person makes a purchase of less than Rs 2000 on an online platform using a credit card, debit card or any other card, then GST will not be levied on it. This exemption will be available only to such payment aggregators (PA) who work under the rules of RBI.
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