White Paper - GST Impact on Non-banking Finance Companies

Non-Banking Finance Companies (NBFCs) are companies which are, as per RBI guidelines, allowed to lend money but cannot accept deposits from the public. NBFCs are subject to several guidelines issued by the Reserve Bank of India and are a highly regulated industry.

Under the erstwhile indirect tax regime, the services provided by NBFCs were mostly exempt. A few services were liable to a centralized service tax, irrespective of the location within India from where the services were provided. Under Goods and Services Tax regime, this aspect has undergone a radical shift and such entities would be required to obtain registration in each state from where they make taxable supplies.

GST has had an impact on various aspects of business such as billing, information technology systems, compliance and governance frameworks of NBFCs. Given that there are monthly compliances for multiple locations, it is suggested that the process for filing returns is automated.

In this whitepaper, we seek to understand the major incomes and expenses of NBFCs and thereafter, the GST issues faced by the industry.

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