GST- Goods And Service Tax
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The applicant, Del Credere Agent (DCA), filed an application before the Authority Advance Ruling for the taxability of interest amount charged by it on short term loan given to the buyers of material. This clarified that the role of the DCA was limited to booking of order and to ensure that payment will be made to the principal in case of default of the customer and in the entire transaction neither principal supplies the goods to DCA, nor does DCA supply the goods to customers.
AAR held that the interest was the consideration towards loan extended to the customers, not towards the payment of consideration for supply of goods by the principal to the customers. As per S. No. 27 of Notification No. 12/2017-Central Tax (Rate),in case of services by way of extending loans, the consideration represented by way of interest is exempt from GST which was covered under this notification. Hence, the interest received by DCA would be exempt from payment of GST.
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