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gst on interest

Narra Siva (29 Points)

24 September 2018

Is gst applicable on interest received from debtors due to late payment???

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RAJA P M ("Do the Right Thing...!!!") (128062 Points)
Replied 24 September 2018

Originally posted by : Narra Siva
	Is gst applicable on interest received from debtors due to late payment???

Yes... GST Applicable for Late Payment Received from Customers after the Due Date (180 days)

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Poonamchand Varma ( Student) (204 Points)
Replied 24 September 2018

interest in the form of late payment of dues attract gst @ 18%

Rohit Tibrewal (Student & Senior Accountant) (3193 Points)
Replied 24 September 2018

Sec 15 states that under such a sale transaction wherein both the parties - seller and buyer are not related persons and price is the sole consideration for the supply than the TRANSACTION Value needs to be adopted.

As per Sec 15 (2) d, Interest or late fees or penalty for delayed payment of any consideration for any supply will be included in the value of supply.

Let's take up an example:

Suppose Mr. A has sold goods worth Rs 1 Lakh to Mr. B said on 15/05/17. Now the term period allowed for the payment was 15days, ie the due date was 01/06/17. The Actual payment was made on 15/08/17, ie. 76 days after the due date. Now as per the agreement of sales, for late payment interest of 15 % pa was chargeable, so the total interest Mr. B needs to pay Mr. A will be (100000*15%*76/365) Rs.3123/-