The GST Council’s 55th meeting in Jaisalmer, chaired by Finance Minister Nirmala Sitharaman, addressed critical issues in the financial sector. Notable decisions included GST exemptions for specific payment aggregators and updates on penal charges and insurance premiums.
GST Exemptions for Payment Aggregators
Payment aggregators handling transactions below ₹2,000 will now enjoy GST exemptions. These entities pool funds from customers and transfer them to merchants, streamlining digital payments. However, the exemption does not extend to payment gateways or fintech platforms offering broader technological services.
No GST on Penal Charges by Banks and NBFCs
The Council announced that penal charges imposed by banks and NBFCs for borrower non-compliance with loan terms, such as missing EMI payments, will not attract GST. This move clarifies the tax implications for penal charges, benefiting financial institutions and borrowers alike.
Deferred Decision on Insurance Premium GST Rates
Discussions on reducing GST rates for health and life insurance premiums were deferred due to differences among the Group of Ministers (GoM) members. Bihar Deputy Chief Minister Samrat Chowdhary indicated that further deliberations are required. The GoM is expected to reconvene in January to continue discussions.
Implications for the Financial Sector
These decisions aim to provide clarity and relief in specific areas of the financial sector while deferring more complex issues like insurance GST rates for future discussions.
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