CBIC Update: CBIC said that it had received applications seeking clarity regarding transactions up to Rs 2,000 made through credit cards, debit cards, charge cards.
GST Update: GST will no longer be levied on penalties imposed by banks and non-banking financial companies. CBIC has clarified this by issuing a circular. The Central Board of Indirect Taxes and Customs also clarified through a circular that GST will no longer be levied on transactions up to Rs 2000 with the help of payment aggregators on online platforms.
Clarifying the issue of GST being applicable on penalty charges levied by banks and NBFCs, CBIC said that penalty charges of the entities regulated by RBI are levied for violating the terms of the contract, and hence GST will not be applicable on them.
CBIC said, as per the recommendation of the 55th GST Council, it is clarified that no GST is payable on the penalty charges imposed by regulated entities for non-compliance of the material terms of the loan contract of the borrower. AMRG & Associates Senior Partner Rajat Mohan said that this clarification is important as it will resolve the disputes related to interpretation.
Regarding the imposition of GST on payment aggregators, CBIC said that it had received applications seeking clarity on GST exemption to payment aggregators in respect of transactions up to Rs 2,000 made through credit cards, debit cards, charge cards or other payment card services. Payment aggregators are entities that facilitate e-commerce websites and merchants in taking payments from their customers.
In its circular, CBIC said that the GST exemption is in respect of settlement of transactions up to Rs 2,000 through credit cards, debit cards, charge cards or other payment card services to RBI regulated payment aggregators, as payment aggregators fall under the definition of ‘acquiring bank’.
