Money lenders or Pawn brokers under GST

Interest income by Money lenders against security of jewellery or other precious articles i.e Pawn Brokers - are they taxable under GST ? If yes, then at what rate ?
Replies (5)

As per my point of view

Yes, if your turnover is more thare threshold limiti.e. 20 lakhs, then you will require to register under  GST and charge tax on your financial services. 18% GST would be applicable on interest income. 

interest not covered under GST

As a pawnbroker, you make two types of supplies for GST purposes:

1) exempt supply from the provision of loans from which you derive interest income; and
2) taxable supply from the sale of forfeited pledges.

You need not charge GST on interest while GST needs to be charged at the standard-rate of 7% for the sale of forfeited pledges.

As per Sl. No.27 of Notification No. 12/2017-CT(Rate)dated 28.06.2017 Services by way of-(a) 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) is exempt under GST. As loan against jewellery is also a loan so interest on such loan is exempt from GST.

Therefore on Interest income no GST but on sale of pledged items GST is leaviable. 

Thanks for your words sir. Still the serial no 27 is same or any change or update or increase in tax rate after 12/2017 notification ?
please clear this doubt too

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