Is there any specific provision for interest income under the Goods and Services Tax (GST) Act? I want to know if I charge an interest for payment delay, do I need to pay GST on it? Also, sometimes we debit buyers’ accounts directly as fee for delay. Will there be GST on such fees?
- Under the GST law, there is a specific provision, under which a supplier of goods/services can include any interest charged on account of a delay in payment of consideration by the customer, in the taxable value of supplies. Therefore, if you charge any interest, you should be required to deposit GST on such interest.
Our customers are located in special economic zones (SEZs). Under the service tax regime, our SEZ customers used to provide us Form A-2, based on which we did not charge service tax. Are we required to obtain a similar form from our customers for not charging GST from them?
- Under the service tax law, a service provider was not required to charge service on its invoice to an SEZ customer if the customer provided Form A-2 wherein it was authorised to receive specified services from such a service provider. However, under the GST law, there has been a change in the said procedure. Under the GST law, supplies to SEZ have been treated as zero-rated, subject to the execution of a letter of undertaking/bond by the service provider. The GST law doesn’t require the SEZ customer to provide any specific form (such as Form A-2 under the service tax law).
I provide services to two SEZ units of the same company in Bengaluru. I understand that SEZ units are required to obtain separate GST registrations. However, the customer has only provided me one GST registration number. Is this acceptable?
- If a company has a non-SEZ as well as an SEZ unit, it is required to obtain different GST registrations for each such unit. However, the government has clarified that if a company has two or more SEZ units within the same state, a single GST registration can be obtained for all such units. Therefore, one GST registration provided by your customer for both of its SEZ units should be acceptable.
As a job worker, can I claim input tax credit on goods procured by the principal manufacturer but supplied directly to me by the vendor? Earlier, we were availing of a tax credit for such procurements.
- Under the GST law, a reading of the relevant provision indicates input tax credit on goods supplied by the vendor to a principal manufacturer cannot be claimed by the job worker, even if the goods are supplied by the vendor directly to such a job worker.
I reside in Delhi and get consultancy services from a provider in Noida, Uttar Pradesh (UP). He is not registered under the GST law. Am I required to take a registration in Noida to pay GST liability as a receiver of service?
- Under the GST law, a person making interstate supplies is mandatorily required to obtain GST registration, even if the annual aggregate turnover of such a person is below the threshold limit. Therefore, in your case, the service provider located in UP is required to obtain a GST registration and pay GST on services rendered to you.
We are engaged in supplying exempt goods to SEZ. Can we still claim input tax credit?
- On account of a specific provision under the GST law, supplies to SEZ are treated as zero-rated. Such a provision also specifically includes supply of goods which are otherwise exempt under the GST law. So, you should be eligible to claim input tax paid by you on procurements even if the goods supplied by you to the SEZ unit are exempt.
The writer is tax partner, PwC India. Aditya Khanna, associate director, PwC contributed to this column. The views expressed are experts’ own. Send your queries to yourmoney@bsmail.in
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