FD Interest in GST
This query is : Resolved
20 June 2022
For FD Interest
1) Is it required to be considered in the calculation of Aggregate Turnover for Registration or Audit Purpose?
2) Will it be considered as Exempt Supply for the purpose of Proportionate reversal of ITC/ITC reversal
Thank You & Regards
CA Roopali
1) Is it required to be considered in the calculation of Aggregate Turnover for Registration or Audit Purpose?
2) Will it be considered as Exempt Supply for the purpose of Proportionate reversal of ITC/ITC reversal
Thank You & Regards
CA Roopali
20 June 2022
1 Not required to be considered for aggregate turnover.
2 No it will not fall under exempt supply.
2 No it will not fall under exempt supply.
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21 June 2022
Isn't Interest on Deposits considered an exempt supply?
21 June 2022
As per my opinion,
As per Notification No. 12/2017- Central Tax (Rate) dated 28/06/2017, S.No.27, services by way of extending deposits, loans or advances are exempted from GST. So, extending deposits are exempted supplies under GST.
Aggregate turnover includes exempted supplies. So while calculating aggregate turnover, exempted supplies are also included for taking registration.
If a person makes supply of any other business services and also makes deposits or extends loans or advances and the turnover exceeds the limit of Rs.20 lakhs, then he has to get registration.
If a person makes supply of goods and also makes deposits or extends loans or advances and the turnover does not exceed Rs.40 lakhs, then he is not liable to get registered. Here, aggregate turnover does not include the deposits/loans/advances. (Refer: Explanation to Section 22 of CGST Act)
If a person only makes deposits/loans/advances, then he is not liable to get registered because the person exclusively involves in exempted supplies (Refer: Section 23 (1) (a) of CGST Act).
As per Notification No. 12/2017- Central Tax (Rate) dated 28/06/2017, S.No.27, services by way of extending deposits, loans or advances are exempted from GST. So, extending deposits are exempted supplies under GST.
Aggregate turnover includes exempted supplies. So while calculating aggregate turnover, exempted supplies are also included for taking registration.
If a person makes supply of any other business services and also makes deposits or extends loans or advances and the turnover exceeds the limit of Rs.20 lakhs, then he has to get registration.
If a person makes supply of goods and also makes deposits or extends loans or advances and the turnover does not exceed Rs.40 lakhs, then he is not liable to get registered. Here, aggregate turnover does not include the deposits/loans/advances. (Refer: Explanation to Section 22 of CGST Act)
If a person only makes deposits/loans/advances, then he is not liable to get registered because the person exclusively involves in exempted supplies (Refer: Section 23 (1) (a) of CGST Act).
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21 June 2022
Thank You Udaya Sir for clarifying 1st part of the question,
What is your opinion on the 2nd part?
As it is Exempt Supply, we need to consider it for Proportionate ITC reversal or is there any exception to such Interest incomes.
What is your opinion on the 2nd part?
As it is Exempt Supply, we need to consider it for Proportionate ITC reversal or is there any exception to such Interest incomes.
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21 June 2022
ITC reversal is required only when the input is used to effect exempted supplies. If you have taken ITC for extending deposits, such as ITC on bank charges related to such deposits, then ITC reversal of such inputs are necessary.
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21 June 2022
Any other views or references
09 July 2022
No proportionate ITC reversal is required.
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