GST Needed to payable on interest component EMI of Credit Card loan
“Ramesh Kumar Patodia v. Citi Bank (HIGH COURT OF CALCUTTA)”
Fact of Case :
- Ramesh Kumar Patodia (“call here as the Petitioner”) who is a holder of a valid credit card issued by Citi Bank (“the Respondent”). The Respondent argued that the credit card provided was the basis for extending the loan to the Petitioner and that the interest component of the EMI is due to credit card services and is not excluded under Notification No. 09/2017 - Integrated Tax (Rate) dated June 28, 2017.
- The petitioner discovered that the initial interest as well as the interest component of the EMI were both subject to IGST @ 18%.
- The petitioner filed a writ case after objecting to the bank's charge of IGST on the initial interest as well as the interest component of equated monthly instalments.
Is the IGST applicable on the interest portion of the EMI for the loan made through Respondent's credit card services?
Judgement: Held :
The below points on which the Honourable High Court of Calcutta dismissed the petitioner's writ petition:
- The loan offer was not an offer to all intending loan taker However was restricted to a specified class of persons who has carrying Credit Card of Citi Bank.
- The specified conditions for loan processing, the way in which equated monthly instalment of loan is reflected in the statements of Credit Card & interest charging in case of payment shortfall of the amount due & mode of payment, all going to be confirmed that Bank service rendered extending the loan is nothing However this a service is related to the credit card.
- It is found that Services rendered by Respondent by way of extending loans to the Petitioner amounts to credit card services & the interest component of equated monthly instalment of the loan was nothing However interest includes in credit card services which was not exempted under Notification No. 09/2017 - Integrated Tax (Rate) dated June 28, 2017(“N/N 09”).
- Analysed Notification No. 09/2017 - Integrated Tax (Rate) dated June 28, 2017(“N/N 09”). And stated that interest involved in credit card services is not exempted.
- Honorable High Court of Calcutta Held that, the services provided by Respondent by way of extending loans Via credit card to the Petitioner attracts Integrated Goods and Services Tax on the interest component of the equated monthly instalment of the loan.