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impact of gst on interest income

07 July 2018

If a money lender receive interest for granting loan what will be the impact of GST on interest income whether he has to pay GST or not?

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5 Replies

Jatin (Accountant) (3479 Points)
Replied 07 July 2018

If interest income above 20 lacs,
Money lender (Private) liable to pay GST on interest income

1 Like

Vinod Babu (24191 Points)
Replied 08 July 2018

In my view, money lending does not comes under GST purview.

RAJA P M ("Do the Right Thing...!!!") (127299 Points)
Replied 08 July 2018

Yes... I agreed to Mr Vinod Babu.,

The definition of goods and supply under sections 2(52) and 2(102) of the CGST Act, exclude money to money transactions. Loan transactions being money to money transactions are therefore not subject to GST.

Further, the GST Council has also exempted money to money transactions in the Schedule of GST rates for services[1]. Entry 8 of the list of exempted services states:

Services by way of— (i) 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); (ii) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers.

Therefore, interest charged on loan transactions shall not be subject to GST.

2 Like