GST Council meet: FM clarifies exemptions for payment aggregators; no GST on loan penal charges

The GST Council, during its 55th meeting in Jaisalmer, addressed several key issues related to the financial sector. Finance Minister Nirmala Sitharaman clarified that payment aggregators handling transactions below ₹2,000 get GST exemptions.

Payment aggregators are entities that facilitate online payments by pooling funds from customers and transferring them to merchants.

However, this exemption does not extend to payment gateways or fintech services, which provide broader technological platforms and services for digital transactions.

Additionally, Sitharaman announced that no GST is levied on penal charges imposed by banks and Non-Banking Financial Companies (NBFCs) for borrower non-compliance with loan terms.
Penal charges refer to the fees imposed on borrowers for failing to adhere to specific loan conditions, such as missing an EMI (Equated Monthly Instalment) payment or breaching repayment schedules.

Further,  the GST Council deferred the decision on reducing GST rates for insurance premiums, including health and life insurance.

The discussions were based on a Group of Ministers’ (GoM) report, but differences among GoM members led to the delay.

Bihar Deputy Chief Minister Samrat Chowdhary confirmed that while there was a discussion on reducing GST for health and life insurance premiums, further deliberation is needed.

“We felt there should be one more meeting on this,” he stated, adding that the GoM on insurance is likely to meet again in January for further discussions.

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