GST Circular No 245/2025
This circular provides clarifications based on the 55th GST Council meeting, held on 21st December 2024.
GST on Penal Charges by Regulated Entities (REs):
Following RBI’s directive (dated 18th August 2023), banks and NBFCs must levy penal charges instead of penal interest for loan term violations starting 1st January 2024.
GST will not be applicable on such penal charges as they are not considered “”tolerating an act”” but are charges for breach of contract.
GST Exemption for Payment Aggregators (PAs):
Payment Aggregators (PAs) handling settlements of amounts under Rs. 2,000 via payment cards qualify for GST exemption under Sl. No. 34 of Notification No. 12/2017-CTR.
This exemption applies only to the settlement function, not to Payment Gateway (PG) services.
GST on Research and Development Services by Government Entities:
Research and development services provided by government entities against grants are exempt from GST starting from 10th October 2024.
For the period from 1st July 2017 to 9th October 2024, GST payments for such services are regularized on an “as is where is” basis.
GST on Skilling Services by Training Partners Approved by NSDC:
The exemption for skilling services provided by Training Partners approved by the National Skill Development Corporation (NSDC) has been reinstated following the 55th GST Council recommendation.
