Nature of activity

Taxable under GST

Remarks

Advancement or repayment of principal sum on loan to someone

Deposits in or withdrawals from a bank account.

Debt collection services or credit control services.

Unsecured debt is transferred to a third person for a consideration.

No

No

Yes

No

According to definition of goods under section 2(52), it includes every kind of movable property other than money and securities. Advancement or repayment of principal sum on loan to someone is the transaction of money, hence, not covered under the purview of Supply.

Even Services by way of extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount are exempted under GST.

Such service is provided for a consideration and consideration is in the nature of charges for collection debt. This service is not covered under actionable claim as debts are secured debt.  Definition of service includes transaction in money relating to the use of money or its conversion by cash or by any other mode, from one form, currency or denomination, to another form, currency or denomination for which a separate consideration is charged. Thus, debt collection service and credit control service are chargeable under GST.

Transfer of unsecured debt is an actionable claim. Definition of goods under GST specifically includes actionable claim in goods. But Schedule III provides that actionable claims, other than lottery, betting and gambling are neither supply of goods nor supply of service. Thus, transaction only in such actionable claim is outside the ambit of service.