No GST to be paid for penal charges levied by banks on borrowers: Nirmala Sitharaman

Finance minister Nirmala Sitharaman on Saturday said that the Goods and Services Tax (GST) would not be imposed on penal charges levied on borrowers by banks or financial institutions.

Penal charges here refer to fees imposed on borrowers for not complying with loan conditions, such as missing an EMI payment or violating repayment schedules.

The 55th meeting of the GST council In Jaisalmer, Rajasthan included the minister of state for finance, chief ministers of Goa, Haryana, Jammu and Kashmir, Meghalaya and Odisha.

During the meeting the ministers made revisions to rates applied on fortified rice kernels and gene therapy, while some decisions were deferred for later.

In the press briefing after the meeting, the finance minister added that states did not agree on bringing aviation turbine fuel under GST.

“States did not feel comfortable. They didn’t want the ATF because they saw it as part of the crude petroleum diesel basket, and therefore they said that it alone cannot be taken out, and therefore that continues to remain where it is today,” she said.

The council did not take a decision about the reduction of GST on insurance premiums since the ministers required time to understand the issue and insights from insurance regulator IRDAI were also awaited.

The GST council also deferred taking a decision on tax rates for food delivery applications such as Swiggy and Zomato.

The GST Council has decided to set up a GoM (group of ministers) which will look into the demand for a 1 per cent calamity cess on certain luxury goods by Andhra Pradesh to raise resources to mitigate natural disasters.

A similar 1 per cent calamity cess was levied on goods and services in Kerala in 2019 to aid rehabilitation after the floods.

With inputs from PTI