In a set of FAQs on the applicability of Goods and Services Tax on financial services, the revenue department has clarified that the Goods and Services Tax will be levied on the exit load charged by mutual funds, as well as late payment charges on outstanding credit card bills. Besides late payment charges on outstanding credit card bills, interest on a finance lease transaction are taxable under GST. Finance lease is a method of borrowing against an asset. GST is charged on additional interest for default in payment of loan installments.
In case of stock broking, charges for delayed payment of the brokerage amount or settlement of obligations will attract GST. This holds true for stock broking services provided to FPIs and NRIs which will also attract GST.
As per the FAQ, services rendered to offshore customers by banks will be treated as intra-state supply and IGST is levied. The purchase of insurance policies by NRIs will attract this levy.
According to the clarifications issued, services provided by the banks to the Reserve Bank of India are not excluded from the purview of GST. But, the repo rate and or reverse rate are exempt from GST.
In the FAQ, the revenue department has clarified that GST will not be levied on free services such as withdrawal from ATM's up to the allowed limit and the issuance of cheque books.
In respect to future contracts, derivatives and forward contracts in commodities, unless the settlement happens by way of physical delivery of the underlying commodity or currency, it will not be liable to Goods and Service Tax.