ADVANCE RULING NO.
GUJ/GAAR/R/2020/10
Facts of the case
- The
Applicant has submitted that he is an individual having not engaged
in any business. His receipts are only from savings, personal loans and
advances and deposits, which are reflected in the Income Tax Returns.
- The
applicant has submitted his estimated receipts for the F.Y. 2018-19 is sum of Rs.20,12,000, it includes:
Rent receipts:
Rs.9,84,000,
Bank interest:
Rs.3,000,
Interest on PPF
deposit:Rs.2,76,000 and
Interest on Personal
Loans and Advances: Rs.7,49,000.
- The
Applicant submitted that their interpretation of law is that if
interest is received on loans and advances, deposits and savings Bank
account by an individual person, who is not engaged in any such business
and who is not a money lender, then such Interest Receipts is not a Supply
and does not attracts GST, as the same is neither “In the course
of Business”nor “In the furtherance of Business”.
- Applicant
further submitted that the receipts from personal loans and advances,
deposits and Bank Interest are not covered under “Business”.
- Applicant
further submitted that for the purpose of calculating the threshold limit
of Rs.20.00 Lakh for obtaining registration under GST law, such interest
receipts are not required to be aggregated.
Questions on which advance ruling sought:
1. Whether Interest received in form of PPF would be considered for the purpose of calculating the threshold limit of Rs.20.00 Lakh for registration under GST Law?
2. Whether Interest received on Personal Loans and Advanced to family/friends would be considered for the purpose of calculating the threshold limit of Rs.20.00 Lakh for registration under GST Law?
3. Whether Interest received on Saving Bank Account would be
considered for the purpose of calculating the threshold limit of Rs.20.00 Lakh
for registration under GST Law?
Ruling:
- The
applicant is an individual with an annual turnover of more than Rs.20
Lakh. Since this income is interest-related, the turnover is
exempt from GST. However, the Applicant also supplies services of
“Renting of immovable property” along with activity of providing services
by way of extending deposits, loans or advances where the consideration is
represented by way of interest. His turnover from the rent income is
Rs.9.84 Lakh and we know that this transaction (“Renting of immovable
property”) is chargeable to GST.
However, his taxable turnover is only
Rs.9.84 Lakh. Going by the definition of “aggregate turnover”, the Applicant is
required to consider the value of both the Page 5 of 5 taxable supply i.e.
“Renting of immovable property” and exempted supply of service provided by way
of extending deposits, loans or advances for which they earned interest income,
to arrive at “Aggregate Turnover” to determine the threshold limit for the
purpose of obtaining registration under the GST Act.
- we conclude that the Applicant is
required to
aggregate the value of exempted
interest income earned by way of extending deposits in PPF & Bank
Saving accounts and loans and advances given to his family/friends along
with the value of the taxable supply i.e. “Renting of immovable property”
for the purpose of calculating the threshold limit of Rs.20.00 Lakh for
obtaining registration under GST law.
Source: AAR GUJARAT
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