Applicability of GST on late fees/ default fees/interest collected on delayed payment of PLI/RPLI premia
Ministry of Communications
Department of Posts
Directorate of Postal Life Insurance
Email Id: aaol.plidte@indiapost.gov.in /aaol plidte@gmail.com
Chanakyapuri PO Complex,
New Delhi— 110 021.
Dated:28.12.2023
To,
All the Heads of Circle
Subject: - Applicability of GST on late fees/ default fees/interest collected on delayed payment of PLI/RPLI premia — reg.
This is regarding applicability of GST on late fees/default fees/interest collected on delayed payment of PLI/RPLI premia.
As per Section 15 of CGST Act, 2017. GST @18% is applicable on the value of late fees/default fees/interest charged on delayed receipt of premium since 1 July, 2017. An illustration is also enclosed for ready reference.
The matter has already been taken up with the Technology section of this Directorate to incorporate the provision of deducting GST @18% on late fees/default fees/interest charged on delayed receipt of premium as envisaged in Section 15 (2) (d) of CGST Act, 2017 in McCamish system.
It is pertinent to mention here that there exist suspense GLs in CSI — SAP for the parking of GST on penalty towards collection of PLI/RPLI premium (Copy enclosed).
In view of the above, it is kindly rcquested to issuc necessary instructions to the HOs/SOs/BOs to collect the GST on late fees/default fees/interest charged on delayed receipt of premium and payment thereon till the provisions is incorporated in McCamish system. The same be deposited to GST authorities and appropriate return be filed.
This has the approval of the competent authority.
Encl: As above.
Illustration regarding applicability of GST on late fees/default fees/interest collected on delayed payment of PLI/RPLI premia — reg.
Suppose, the PLI premium = 2000/- & GST @18% = 36/- (CGST =18/- & SGST= 18/-)
The insurant paid the premium after delaying by one month,
So, penalty = 20/-
Therefore, GST on penalty = 3.6 /- (@18%)
i.e. CGST = 1.8/-=2/-
& SGST = 1.8/-=2/-
Total collection = (2000+36+20+4*) = 2060/-
The GST on penalty (here it is 4/-) is to be parked in the respective GLs and needs to be remitted to the GST authority in due course of time.
In case of cash policies received via counter, the extra amount Rs. 4/- (GST on penalty) is to be manually entered in the receipt voucher.
By
(Sachidanand Prasad)
General Manager (Finance)
Copy to:
1) The CGM, PLI Dircctorate,
2) The GM (B&I), PLI Directorate.
3) The AGM (O&T), PLI Directorate.
4) The DDM-1, DDM-I1, DDM-III, PLI Dircctorate.