Mr. A sold goods to Mr. B and against which payment is made through by opening Letter of Credit (LC) by Mr. B for 90 Days.
In the above scenario Mr. A will receive payment but Bank will charge the interest on that payment amount for 90 Days. So Mr. A will have to pay interest on payment amount for 90 Days. But this interest is to be born by Mr. B as per agreement between Mr. A and Mr. B.
Now, Mr. A will issue invoice of Interest amount to Mr. B. What will be GST Rate charge by Mr. A in the Invoice? Gst rate applicable to Goods (Say 5%) or 18%.
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GST Rate on Interest Invoice
Replies (3)
Quick Summary
I think you have charged 18%
18% only.
The GST Rate will be equal at which the Invoice was billed.
For e.g. if you have sold the goods with GST @ 18% then you will raise this Interest Invoice with 18% GST, and if the goods were charged @ 5%, then this Interest Invoice will be with 5% GST.
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