GST Payable On Value Of Supply Which Includes Interest For Delayed Payment: AAR
Mariya Paliwala
5 April 2022 3:51 PM GMT
The Telangana Authority of Advance Ruling (AAR) bench of members S.V. Kasi Visweswara Rao and B. Raghu Kiranhas ruled that the Goods and Service Tax is payable on the value of supply, which includes interest, late fee, or penalty for delayed payment.The applicant, M/s.Hyderabad Metropolitan Water Supply and Sewerage Board, is a local authority which has been making payments...
The Telangana Authority of Advance Ruling (AAR) bench of members S.V. Kasi Visweswara Rao and B. Raghu Kiranhas ruled that the Goods and Service Tax is payable on the value of supply, which includes interest, late fee, or penalty for delayed payment.
The applicant, M/s.Hyderabad Metropolitan Water Supply and Sewerage Board, is a local authority which has been making payments to the contractors in an equated yearly instalment manner, which consists of both the principal amount and interest on delayed payment. The applicant wanted to ascertain the liability on payment of GST on interest for delayed payment.
The applicant has sought an advance ruling on the issue of whether the payment of an Equated Yearly Instalment, which includes principal amount and interest under the Annuity Model, is liable for payment of GST.
The AAR observed that as per clause (d) of sub section 2 of Section 15 of the CGST Act, 2017, the value of supply shall include interest or late fee or penalty for delayed payment of any consideration for any supply. Therefore, the money paid to the contractor by the applicant, including the interest on delayed payments, is liable to tax under the CGST Act, 2017.
Applicant's Name: M/s. Hyderabad Metropolitan Water Supply and Sewerage Board
Citation: TSAAR Order No.18/2022
Dated: 29.03.2022
