- Co-lending charges by NBFCs will be subject to 18 percent GST on 0.5 to 1 percent of the loan amount.
- NBFCs and banks agreed on the presence of a service component in co-lending arrangements.
- Co-lending is supported by the Reserve Bank of India and is growing at 35 to 40 percent annually.
- Currently, NBFCs source loan proposals in co-lending with banks without paying GST on service charges.
- In co-lending, NBFCs finance 20 percent and banks finance 80 percent of the loan amount.
- GST on service charges in co-lending will be discussed in the next GST Council meeting.
- The department of revenue asked FIDC to propose a minimum value for service charges in co-lending.
- GST will apply on the higher of the minimum or actual service charge.
- FIDC, Indian Banks Association, and government departments reached a consensus on the service component in co-lending.
- DGGI is investigating potential GST evasion in the co-lending business model.
- FIDC argued that the excess interest spread is interest income, not a service charge, and should not be subject to GST.
Source: a2ztaxcorp.net
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
