I am a supplier of goods. I have charged interest from my customer for making late payment. Whether this interest is taxable. if yes, rate of tax and when tax is payable?
As per Section 15(2)(d) of the CGST Act, 2017, the interest on late payment by customer towards any supply would be included in the value of such supply. Accordingly such interest would be taxable. The rate of tax would be that applicable on the good / service on supply of which such interest has been charged. Further when payment is to be made would be determined by time of supply. As per Section 12(6) / 13(6), the time of supply for such interest would the date when it is received. Accordingly whenever the late payment intt is actually received by supplier, then only the tax becomes payable.
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