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Gst on interest in trading transactions

20 July 2021

I am a textiles wholesaler. Due to covid disruptions, I need to pay intetest to my suppliers as well as collect interest from my customers. Does that interest attract GST?

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6 Replies

prasad Nilugal (3914 Points)
Replied 20 July 2021

Yes , as per section 15 (2) (d ) of the CGST act 2017 , Gst applicable on Interest charge by you and supplier .

Imthias ahamed Kormath (910 Points)
Replied 20 July 2021

This type of interest ur terms & condition relate ur business payment transaction,It follow previously by trade community.

Chartered Accountants ASPIRANT (28 Points)
Replied 20 July 2021

Only that interest which is having the bearance on loans, advances or deposits is Exempt service.. Interest on delayed consideration payment will be taxable by issuing debit notes as it is after supply.

CA Akshay Hiregange (Partner - Audit & Assistance) (4515 Points)
Replied 20 July 2021

Originally posted by : Chartered Accountants ASPIRANT
	Only that interest which is having the bearance on loans, advances or deposits is Exempt service.. Interest on delayed consideration payment will be taxable by issuing debit notes as it is after supply.

Agree with the above. Also time of supply against such interest is upon receipt of the amount and not supply of goods/services.

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Pankaj Rawat (GST Practitioner) (55032 Points)
Replied 21 July 2021

Yes agree with CA Akshay Ji..
you need to deposit the tax only when you received interest amount. (Reference Section 12(6) CGST Act)

Imthias ahamed Kormath (910 Points)
Replied 23 July 2021

It is an expense like fright, insurance for delay in payment. Section 12(6) give a provision to the dealer.But, how did issue an invoice by supplier for this provision conducted by him?