The Impact of GST on Chartered Accountant Loan

Taxes can be one of the main reasons among many which would make you consider your financial expenditure on first. Previously in India, there were different taxes levied on the purchase of a single commodity. These taxes would increase the purchasing cost and were not easy to monitor, to which the government implemented a new form of taxation that would combine all the taxes and will be easy to monitor.

With the introduction of the budget for the financial year 2017-18, the central ministry introduced many reforms which had adverse effects on the country’s economic policies. The Goods and service tax (GST) was among these implemented measures. It was introduced with the motive of combining all the taxes to ensure fluidity for taxation and monitoring them. The GST announcement caused a tremendous chaos and confusion among the people even before its implementation. Many people believed that it would make taxes complicated and inconvenient; on the other hand, some assume it is a great step for the progress of the country.

The commercial sector was very much impacted by the post GST effect; the newly implemented taxation structure caused business houses to change their taxes and charges formation. Along with retailers, the banks and NBFCs had to change their policies too. This led to a massive difference in the lending terms that were offered prior GST implementation. Due to which the people looking for loans have to reconsider their financial standings.

Due to the impact of GST lending products such as Home loans, Education loans, CA and engineer loans have undergone significant changes. If you are looking for a CA Loan here are things you need to consider while applying for one.

CA loans or Chartered Accountant Loans are categorized under personal loans, but CA loan applicants are mostly considered as Self-employed. Since they are a bifurcation of personal loans, they have the same application process and charges. When applying for a CA loan, you have to pay certain costs and fees that are required for the loan approval. These loan charges have been changed since the implementation of GST too.

Before GST application, the lenders used to levy 1 percent to 2 percent as the computing fee for the loan application and the lenders also used to charge 15 percent as service tax. After GST, the computing cost remains the same whereas the service tax will be levied at 18 percent basis due to the GST effect. For example, by the older taxation structure consider the loan amount as INR 10 Lakhs, with this amount the processing fee would fall in the range of INR 10,000 to INR 20,000, and the service tax on the processing fee, i.e. 15%  would be around INR 1,500 to INR 3,000. When both the charges are combined, the amount results in INR 11,500 to INR 23,000.

After the GST implementation, the service tax on processing fees will range from INR 1,800 to INR 3,600 as the GST is levied between the ranges of 18 percent to 24 percent. Due to which the combination of both will result in the amount of INR 11,800 to 23,600. It is essential that you check your lender’s taxation policy, as processing fee for a personal loan application is non-refundable.

The same applies for pre-payment and foreclosure fees too. So before applying for a CA loan, you must clear all the doubts about the changes in the taxation policy during loan repayment. You can also visit the lender’s website for any further information.

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