Impact Of GST On Personal Loan – SimplyCash

Posted by Ankit Verma on May 13th, 2022

The Goods and Services Tax (GST) is the biggest tax reform undertaken by the Government of India. GST was introduced for simplifying the country’s tax structure by having one common tax. GST thus applies across different industrial sectors.  For the Banking and Financial Sector, the GST rate has been increased from a 15% slab to 18%. GST thus has an impact on the lending process. It tends to impact loans including personal loans over time.

What is a Personal Loan?

A personal loan is a type of unsecured loan which can be availed for meeting short-term obligations like medical expenses, education, house rent, and so on. It is also easily available as a collateral-free loan, without sacrificing any asset. Still, there are certain things that a borrower has to be aware of before availing of a personal loan to not create any confusion and entail higher charges. This article will help you to understand how GST impacts personal loans.

Impact of GST on Personal Loan

Any borrower seeking to avail of a personal loan has to bear the GST charged at the current rate of 18%. This is in addition to other lender charges as applicable. However, this does not impact your monthly loan repayments, though it impacts the different charges that get levied by the lender. These charges include loan processing fees, foreclosure charges, penalty charges for EMI default, and so on.  

The personal loan eligibility criteria especially for self-employed/business class changed a bit after GST implementation. However, a borrower who is self-employed borrower and wants a business loan in the personal loan category has to furnish a copy of the GST certificate for documentation purposes. Taking a personal loan today is costlier by 3% as compared to pre-GST implementation. So, a higher loan amount entails a higher GST payout implying GST increases the loan burden for the borrower.

Despite of GST implications on availing of personal loans, owing to the presence of credible and innovative online instant personal loans apps like SimplyCash – a venture by Hero FinCorp, getting a personal loan has never been so easier. At SimplyCash, a fully digitized online loan platform, you can easily avail of instant personal loans between Rs. 50,000 – Rs. 1.5 lakhs, at an interest rate starting from 2.08% per month. SimplyCash assures its borrowers a seamless loan process that on approval gets disbursed to the borrower’s registered bank account within a few hours, thus making the whole loan journey worthwhile.

Eligibility Criteria for Personal Loan

The common eligibility criteria are:

• Proof of Indian Citizenship
• Age of borrower to be between 21 - 58 years
• Minimum monthly income or salary - Rs.15,000
• Net banking details to be verified
• Salaried individual should be working with either private sector or public 
  sector
• Mandatory documents – KYC documents in a paperless format – Aadhar card and PAN card

Adhere to the GST norms as applicable when applying for a personal loan online and increase your chances of loan approval to support several financial reasons.