I had purchased a product on Amazon & paid through ICICI Bank credit card under 12 months EMI option.
EMI is of Rs. 804 per month.
Bank has debited 709.25 principal + 94.22 interest +16.96 IGST @ 18% on int amt.
Is it lawful ?
As per my knowledge if bank is charging interest on late payment of credit card bill, then only bank is supposed to charge GST on this interest.
But in case of interest on loan EMI bank is not supposed to charge GST.
Please clarify.
vide Notification No. 12/2017- Central Tax (Rate), dt. 28.06.17, Services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than "interest" involved in credit card services) is exempt.
Here, "interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred (including a deposit, claim or other similar right or obligation) but does not include any service fee or other charge in respect of the moneys borrowed or debt incurred or in respect of any credit facility which has not been utilised.
So, in case of credit cards, the scope of interest is not just restricted to late payment interest.
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