GST on Penal Charges Out; Refunds Must Follow

In a significant decision, the GST Council clarified during its 55th meeting on December 21, 2024, that penal charges imposed by banks and financial institutions will no longer attract Goods and Services Tax (GST). This clarification has resolved months of confusion that arose when banks began levying 18% GST on penal charges from April, 2024. Moneylife had highlighted the scale of the problem ear…