Q. 166 A sales goods to B . A discounted this bill from C and received immediate payment . Later on C , issued bill to B & received full payment . Is GST applicable on Bill discounting business i, e on C & if applicable should be on net discount charges received ?

Ans. Under GST law, bill discounting of invoices or cheques falls within the meaning of “services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount”. Such discounting is exempt from payment of GST, as such discounting is nothing but a manner of extending a credit facility or a loan. Hence, it is considered an exempt supply. However, if some service charges or service fees or documentation fees or broking charges or such like fees or charges are charged, the same would be a consideration for the supply of service and chargeable to GST.