RCM on notional loan processing fees

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..... RCM on notional loan processing fees
Query (Issue) Started By: - RS SIMHA Dated:- 14-12-2022 Last Reply Date:- 14-12-2022 Goods and Services Tax - GST
Got 2 Replies
GST
We have External Commercial Borrowings from the Overseas Parent Company. The question is do we need to pay GST under RCM on a notional loan processing fees ? Reply By Rajagopalan Ranganathan: The Reply: Sir, Since .....

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..... notional loan processing fees are in the nature of administrative fees and can be distinguished from interest payable such fees are liable to GST. Since you are making payment of such fees to your Overseas Parent Company you have to pay GST under RCM. Since the credit of the tax paid under RCM, there is no financial loss to the person who pays the tax under RCM. Reply By Amit Agrawal: The Reply: .....

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..... Liability to pay gst comes into picture only when there is supply. And such liability stays even if there is no consideration for such supply between related parties. However, I feel that one need not presume that there was any supply (in form of processing of loan application) simply because parent Co. has given loan to Indian subsidiary. Paying taxes on 'market rate' etc. (say, at n .....

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..... otional value) between related party traction where there is no consideration involved, is not equal to presuming 'supply' took place on notional basis between related parties. Services provided by parent Co. in subject matter cannot be equated to 'services supplied by a banking company, or a financial institution, or a non-banking financial company, to account holders'. In any ca .....

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..... se, there is no law / rule that banking company, or a financial institution, or a non-banking financial company must charge some 'loan processing fee' while giving any loan to its customers. Hence & under my given understanding of subject situation, there is no liability to pay gst under RCM basis by the Indian subsidiary on 'notional loan processing fees'. These are ex facie v .....

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..... iews of mine and the same should not be construed as professional advice / suggestion.
Discussion Forum - Knowledge Sharing .....

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