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GST on Interest Paid

CA Parag Jani (BCom CA DISA Forensic Auditor) (288 Points)

19 November 2017

What will be the GST effect on interest paid to Banks and NBFC? How to show it in GSTR 3B? We don't have any invoice for it as this is a part of EMI from Bank and NBFC side.

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2 Replies

RAJA P M ("Do the Right Thing...!!!") (126981 Points)
Replied 19 November 2017

GST not applicable for Interest. Also don't want show the loan repayment and interest details in GSTR returns...

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Desai Makarand M. (Student) (60 Points)
Replied 19 November 2017

GST is not leviable on interest.
Money to Money transactions are out of scope for GST as per Section 2(52) and 2(102).
More importantly, the Exemption list of Services, excludes (vide Entry No. 8) the financial services where the consideration is represented in form of interest and discounts.
The entry reads :
" 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;"

So, no GST is leviable on interest, nor it is necessary to file return regarding such transactions.