GST Payable on Penal Interest for default in EMI payment: AAR

In re Bajaj Finance Limited (AAR GST Maharashtra) Exemption for financial transactions under GST laws is only in respect of the interest/discount earned or paid for loans, deposits or advances. If the transaction, as in the subject case deviates from the above the same fails the test of being a ‘loan’, ‘deposit’ or ‘advance’, or the consideration is not an interest or discount, the exemption is not admissible. In the subject case the amount of penal charges cannot be said to form a part of interest on ‘loan’, ‘deposit’ or ‘advance’. It is recovered/imposed only because ...