Levy of GST on Interest Received by a Foreman of Chit Fund from Defaulting Subscribers—CA. Satyadev Purohit

SUBSCRIBE FOR FULL CONTENT


The Tax Publishers GST--Levy of GST on Interest Levy of GST on Interest Received by a Foreman of Chit Fund from Defaulting Subscribers CA. Satyadev Purohit The present articles seeks to discuss the nature of services provided by chits and their taxability under the GST law. 1. Introduction Under the GST law, money and securities are regarded neither as goods nor services, Hence, transactions in money and securities are not chargeable to tax. Upto 17-7-2022, services provided by a foreman of a chit fund in relation to chit were chargeable to tax at the rate of 6%. This entry has been omitted with effect from 18-7-2022. Clause (a) of Explanation to item (i) of S. No. 15 defines the term "chit" to mean a transaction whether called chit, chit fund, chitty, kuri, or by whatever name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain, instead) by way of periodical instalments over a definite period and that each subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to a prize amount. As per clause (b) of item (i), "foreman of chit fund" shall have the same meaning as is assigned to the expression "foreman" in clause (j) of section 2 of the Chit Funds Act, 1982. At the same time, as per S. No. 27 of Notification No. 12/2017-Central Tax (Rate), dt. 28-6-2017 services by way of -- (a) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services); SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Levy of GST on Interest

Levy of GST on Interest Received by a Foreman of Chit Fund from Defaulting Subscribers

CA. Satyadev Purohit

The present articles seeks to discuss the nature of services provided by chits and their taxability under the GST law.

1. Introduction

Under the GST law, money and securities are regarded neither as goods nor services, Hence, transactions in money and securities are not chargeable to tax.

Upto 17-7-2022, services provided by a foreman of a chit fund in relation to chit were chargeable to tax at the rate of 6%. This entry has been omitted with effect from 18-7-2022.

Clause (a) of Explanation to item (i) of S. No. 15 defines the term "chit" to mean a transaction whether called chit, chit fund, chitty, kuri, or by whatever name by or under which a person enters into an agreement with a specified number of persons that every one of them shall subscribe a certain sum of money (or a certain quantity of grain, instead) by way of periodical instalments over a definite period and that each subscriber shall, in his turn, as determined by lot or by auction or by tender or in such other manner as may be specified in the chit agreement, be entitled to a prize amount.

As per clause (b) of item (i), "foreman of chit fund" shall have the same meaning as is assigned to the expression "foreman" in clause (j) of section 2 of the Chit Funds Act, 1982.

At the same time, as per S. No. 27 of Notification No. 12/2017-Central Tax (Rate), dt. 28-6-2017 services by way of --

(a) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount (other than interest involved in credit card services);