Table of Contents
1. Are services provided to and by the RBI exempted from GST?
- Services provided by the Reserve Bank of India is exempt from GST.
- However, services provided to RBI by other banks will be taxable as they are not covered under any exemption
- It has to be noted that services provided to and by all other banks will be covered under GST and is taxable
2. Will GST be levied on interest paid on amount borrowed as loan?
- No, GST will not be levied on interest paid on loans as it is covered under the exemption.
- However, the exemption covers only the interest paid as consideration towards borrowing any amount as loan, advance or extending deposits and hence all other charges such as service/administrative/brokering charge taxable.
- Note: Interest charged for credit card services is taxable since it is not covered under any exemption.
3. Is the interest charged by any person other than banks liable to GST?
- Entry 27 of the exemption notification no 12/27 –CT (Rate) does not specifically state that only the interest charged by banks is exempt.
- Therefore, it is safe to assume that the interest charged by any person lending money is not liable to any GST.
4. Does the purchase or sale of foreign currency attract GST?
- The purchase or sale of foreign currencies between banks and authorized dealers will not attract GST
- If the purchase or sale is provided to any other person other or to the public, such service will attract GST.
5. Are the services provided by a bank to a PMJDY account holder taxable?
- No, services provided by a banking company to a Basic Savings Bank account holder under the Pradhan Mantri Jan Dhan Yojana will be exempted
- PMJDY is a scheme launched by the Government of India for Financial Inclusion to provide basic financial services to individuals who do not have access to a bank account.
6. Will the service of settlement of point of sale transactions by banks to any person accepting payment via debit or credit cards attract GST?
If the service provided by a bank or financial institution is concerned with the settlement of an amount of upto Rs.2000 in a single transaction through credit card, debit card or any other card service then such service will not attract GST.
7. What are the circumstances where services provided by a bank are taxable?
- Some of the bank services that attract GST include:
- Processing fee collected on loans.
- Standing instruction charges for payment of telephone bills, insurance premium etc.
- Late payment fees for delayed payment of outstanding dues on credit cards.
- Late payment charges in respect of EMI transactions.
- Charges for Issuing new cheque books.
8. Under what circumstances will services provided in an IFSC be exempted from GST?
When the services are provided by an intermediary located in an IFSC (International financial services center) to a person located outside India, in any currency other than Indian rupees – such services will be exempt from GST