Loans given by lending institutions are accompanied by a processing fee. This fee is charged to a potential borrower for processing an application for a loan. Since personal loans fall in this category, borrowers are charged with a processing fee. A GST of 18% is applicable on loan processing charges Generally, a personal loan processing fee ranges from 2-3%, while Standard Chartered Bank charges up to 2.25%. You can get a loan amount up to Rs 30 lakh at attractive interest rates and get up to 50% discount on processing fees for online applications.
Another area where GST at 18% is applicable is prepayment charge for personal loans. This charge is only applicable during prepayment, ie. when you repay the entire personal loan before your tenure ends. This charge is based on a percentage of the remaining personal loan balance or a certain number of months’ worth of interest. At Standard Chartered, personal loan prepayment charge is based on the number of EMIs paid. GST is levied at the applicable rates in force on all taxable supplies from July 1, 2017.
Even though there is a slight rise in the cost of a personal loan, the burden of the increase in cost is not that high on the borrower. Thankfully, the EMI portion has been left untouched by GST. GST does not really have a direct impact on personal loans EMI because the personal EMI did not attract service tax earlier, and so do not attract GST now. As a result, personal loan EMI will remain unchanged and unaffected by GST. Want to know EMI on a Rs 5 lakh personal loan? Use the personal loan EMI calculator here to know the monthly amount you need to pay
Banks like Standard Chartered can help you get quick personal loans at affordable interest rates so that your financial needs are easily met.