Bajaj Finance Limited, a leading non-banking financial company in India, is facing a significant Goods and Services Tax (GST) demand from the Pune Tax authorities, reported The Hindu Business Line. The company has been ordered to pay a total of ₹863 crore, including ₹341.28 crore in principal GST, along with interest and penalties.
The demand arose from classification of upfront interest collected from customers as a “fee,” by the tax authorities, rather than as a component of the loan. This categorization has resulted in the imposition of GST on these interest payments, which Bajaj Finance disputes.
The demand period covers a period from July 2017 to March 2024. Bajaj Finance has announced its intention to appeal this decision to the Commissioner (Appeals-II), CGST, Pune.
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The company’s exchange filing states that the matter pertains to agreements with various manufacturers and dealers where Bajaj Finance offers loans to customers at concessional rates for the purchase of consumer durables. As part of these agreements, the company receives interest subsidies from these manufacturers and dealers.
Bajaj Finance maintains that the upfront interest collected from customers is an integral part of the loan transaction and should not be treated as a separate fee for GST purposes. The company believes the authorities’ interpretation is incorrect and intends to vigorously defend its position through the appeal process.
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