KUALA LUMPUR, Jan 13 – Interest charged on loans and financing is exempted from the Goods and Services Tax (GST), Alliance Bank Malaysia Bhd said on its website. The 6% GST will apply only on loan processing fees, the bank said. Details on what the breakdown will be has yet to be finalised and will be made public closer to April 1 when the GST takes effect. It further advised that advisory services fee or charges for making copies of documents with regard to loans will be subject to GST.
If the applicant doesn’t take up the loan offer, both the processing fees and GST are not collected. Alliance Bank also said no GST will apply on late payment charges, the compensation charge for dishonoured cheques and overdraft excess fees. It further said loans for projects outside Malaysia will not attract GST. It is still unclear if the 6% GST will apply for for the purchase of a car or commercial property.
Stating that all banking services rendered and conducted in Malaysia are subjected to GST, it gave examples like standing instruction and Giro processing fees plus rental of safe deposit boxes. GST also applies to intermediary services in which fees and commissions are charged. These services include arranging, broking, underwriting and advising on financial services.