gst in india  

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Justification of GST
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GST NBFCs - Different activities performed by NBFCs

As discussed earlier, NBFCs are licensed to perform various activities discussed in the paragraphs above. However, to list out the entire activities rendered by NBFCs would not be practicable. Accordingly, we can examine the activities from the context of their broad roles in the production mechanism discussed in the earlier paragraph and (to draw an inference) based on the RBI press releases/ directives. This provides us a starting point to determine the activities that can be performed by the NBFCs.

These activities can be broadly classified as fee-based and fund-based (non-fee based). Though the terms ‘fee based’ or ‘fund-based’ activities have not been specifically defined, an indicative list of the types of activities covered under these can be formulated from various press release/ directives issued by RBI.

Fee-based activities: From the perspective of NBFCs, based on the RBI press releases/ directives2 and existing tax regulations, fee-based activities are activities which are the product of the (service) production mechanism itself. Typically these would include service products like advisory and consultancy, administration/ processing, providing additional/ optional facilities, transactions processing, etc. The NBFCs charge a fee/ or earn a commission for its service product based on the value addition in the process/ transaction.

Fund-based activities: Broadly, fund-based activities are where the NBFCs provide the factor of production ie capital. These activities are primarily in relation to capital or funds maintained by the NBFCs, which can be used by the NBFCs for the purpose of loaning, investment and asset financing, under the NBFC license. Each of these activities allows the NBFC to utilize the capital/ funds directly to derive income/ returns from such capital/ funds.

The Tribunal is also empowered to hear the appeals against orders passed by the designated authority with regard to Anti Dumping Duties under the Customs Tariff Act, 1975

Typical example would be loans for various purposes, financing, proprietor trading, securitization etc. The income/ return earned are in form of interest or trading profits.


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