Brief Facts :
In case of Maintenance Bills raised by the society , there are some cases where members have delayed in payment of the dues beyond the due date , resulting in charge of interest on such delayed payments .
The following points may be noted in the context of our query :
a) Interest per se does not have a tariff under GST Act and needs to charged at the same rate applicable to the sale of product / services
b) In the case of housing society , the applicable tariff on service is 18% SAC CODE 999599
c) By way of notification 12/2017 entry 77(c) the charges levied by society are exempt upto Rs.5000 p.m SAC CODE 9995 ( subsequently increased to Rs.7500 p.m) for procurement of services from third party . Since charges like interest , club house charges , gym charges , swimming pool charges , parking charges , noc charges , etc.. do not involve procurement of service from third party , they do not come under the exemption granted under the notification .
d) By way of circular 102/21/2019 dated 28/06/19 , the department has clarified interest charged by Financial institution ( NBFC / Bank etc.. ) are covered under notification 12/2017 entry 27 , hence not chargeable to GST , but interest charged by others for sale of product or service is chargeable to GST under section 15(2)(d)
e) In case of exempted supplies ( which applies to society vide notification 12/2017 ) , the rate is still prescribed but exempt vide notification ( u/s 11 of CGST Act ) , and hence the rate applicable would be 18% .
Our query / clarification sought is , considering all the above points together ,
1) Does such charge of interest on members , attract the provisions of GST Act , and hence needs to be charged GST @ 18% .
2) Whether in case of maintenance bills where taxable service is less than Rs.7,500/- p.m there is delay in payment of maintenance dues , is the interest charged on such delay , exempt from GST ?
3) When a particular product or service is exempt subject to certain conditions u/s 11 of GST Act , rate of tariff is still applicable , but only gets exempted due to the notification
4) When the notification 12/2017 provides exemption only for procurement of service from 3rd party , can the resultant interest on delayed payment ( where there is no procurement of service ) deemed as exempt .
- Yes Sir in light of detailed provisions as mentioned by you in the querry.
- No GST as basic amount is exempt.
- In such cases also if basic amount is exempt, the intt thereon will also be exempt.
- As per Sec 15(2)(d) of CGST Act, intt or late fee or penalty for delayed payment of any consideration for any supply is to be included in the value. Thus if we see such intt. etc is not regarded as separate supply but rather included in the basic value as already pointed out by your goodself. Thus if basic supply of RWA of contribution recd towards procurement of service from 3rd parties are exempt and intt. is charged by RWA on delayed payment of such contribution same should also be exempt as charging of intt is not a separate supply.
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