Applicability of GST on interest Income ?

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This query is : Resolved

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This discussion clarifies whether interest income from loans given to friends and relatives, and interest from a partnership firm on capital, is subject to GST. The consensus is that such interest income is exempt from GST and does not count towards the £20 lakh threshold for mandatory GST registration. Therefore, Mr. A, with a contractor turnover of £15 lakh and £8 lakh in interest income, would not be liable for GST registration based on this interest.

CA Abhishek Singh

CA Abhishek Singh (Querist)

20 December 2024 Hello everyone,

Mr. A is contractor having annual turnover of 15 lacs and other income as below
Interest on loan given to friends and relatives - 6 lacs
Interest from partnership firm on capital - 2 lakh

My query ?
Is he liable to register under GST ? whether 6 lacs & 2 lacs would be covered in determining threshold limit of 20 lacs for registration under GST ?

Dhirajlal Rambhia

Dhirajlal Rambhia (Expert)

20 December 2024 No.
As per Entry No. 27 of Notification No. 12/2017, services by way of extending deposits, loans, or advances are exempt from GST, provided the consideration is represented solely by interest or discount. Even Under Schedule II of the CGST Act, interest on loans is specifically excluded from the definition of taxable supply.