Government clarifies GST applicability on financial services
Goods and services tax applies to exit loads charged by mutual funds, additional interest charged for default in payment of loan instalments and late payment charges
levied by credit card companies, the government has said. Securitisation, future contracts, derivatives and forward contracts in commodities, unless entailing actual
delivery of commodities, will however not be liable to this tax which was introduced on July 1last year. The detailed clarifications for the financial services sector
issued in the form of frequently asked questions (FAQs) seeks to address some pertinent issues relating to the industry such as levy of tax on free services. The FAQs
issued late Saturday night cover banking, insurance and capital markets. For banks, automated tellers machines or ATMs will not constitute place of business and will
not trigger GST registration, the government said. In case services are provided by multiple branches to a customer, the branch where the account is opened will pay
GST and other branches will be deemed to provide services to the main branch. In case of import of gold, integrated GST will apply once, on import, and not again when
it is appropriated by banks.
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