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Late Payment Interest collected on Exempted Supply

This query is : Resolved 
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(Querist)
23 April 2021 Dear Sir,

If a Governmental Agency is providing exempted goods and charging late payment interest from the customers will the interest be covered under GST?

Outward supply is wholly exempt.

Please advise
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CA Altamush Zafar

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CA Altamush Zafar (Expert)
24 April 2021 Technically Yes, GST applicable on charges on late payment. However there has been clarifications and rulings in case of banks that since main interest is exempt therefore penal interest on late payment of installment will also be exempt.
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