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How does GST impact your Chartered Accountant Loan

  • Highlights

  • Pre-GST, 15% service tax on CA loan processing fees

  • Post-GST: 18% GST on service charge

  • Despite a meagre tax hike CA Loans are still beneficial

Loans for chartered accountants, including a personal loan, business loan, home loan and loan against property, are a customised and convenient mode of finance for CAs. With GST changing how much you pay for a gamut of goods and services, take a look at how it impacts a loan for chartered accountants.

Impact on personal loans and business loans

Prior to the introduction of GST, a service tax of 15% was applicable on the processing fees of a personal loan or business loan. So, if you took a loan of Rs.5 lakh, with a processing fee charged at 2%, you would have to pay Rs.10,000 as processing fees. The service tax on this amount would be charged as 15% on Rs.10,000, which is Rs.1,500. As a result, your total processing fee payment would be Rs.10,000 + Rs.1,500, which is Rs.11,500.

Post the implementation of GST, the 15% service tax has been replaced by 18% GST that is also levied on the processing fees. This is to say that if your processing fee is Rs.10,000 for a loan of Rs.5 lakh, your total payment would come up to Rs.11,800, instead of Rs.11,500.
Apart from processing fees, this change is applicable to charges such as the part prepayment fees as well. So, post the implementation of GST, the cost of your personal loan or business loan for chartered accountants has risen ever so slightly. Bajaj Finserv offers these loans with multiple benefits, at attractive interest rates and basic fees.

Impact on home loans and loans against property

Similar to personal loans and business loans, home loans were also applicable for a 15% service charge. But, with GST coming into play, this figure has risen to 18% as well. So, if you take a home loan of Rs.30 lakh, your total processing fees (calculated at 2%with 15% service charge) would be Rs.69,000. But, with 18% GST, this figure will now come up to Rs.70,800 (calculated at 2%with 18% GST).
The same goes for part prepayments made towards the home loan or home loan balance transfer. But, do note that if you have a fixed rate of interest for your home loan, you will have to pay 18% GST. On the other hand, if your home loan comes with a floating rate of interest, you won’t have to pay this escalated charge.

Why a loan for chartered accountants is still a beneficial source of finance

Despite the 3%–increase, a loan for chartered accountants, whether it is a personal loan, business loan, home loan or loan against property is still an excellent source of finance. In reality, the 3% hike translates into a marginal increase in your cash outflow. So, take a look at the benefits that this suite of loans has to offer.

1. Substantial loan amount:
To cater to all your needs, you have a range of loan amounts to choose from. Business loans and personal loans offer up to Rs.35 lakh, whereas home loans and loans against property offer up to Rs.2 crore.


2. Quick approvals and disbursal:
To ensure that you get the funds as soon as possible, approval is quick and disbursal takes place within 24 hours after you have submitted your documents.


3. Flexi loan account:
You can use a flexi loan account wherein you can withdraw the entire amount, or withdraw in parts, as the need arises. You can pay interest as EMI and repay the principal at the end of the tenor. So, with this facility, you can save up to 45.3% in EMIs as compared to a term loan.


4. Collateral-free:
Business loans and personal loans are collateral-free, which means that you don’t need to risk your assets to access funds.


5. Flexible tenor:
If you take an unsecured loan, you can choose a tenor spanning 12–96 months. On the other hand, a secured loan gives you the option of repaying in up to 240 months. This way, you can spread your EMIs according to what you can afford.


6. Nominal rate of interest:
With an affordable rate of interest, you can access a higher amount of credit without any financial stress.


7. Easy eligibility and minimal documentation:
You can apply for this loan with a certificate of practice of a minimum of 4 years. Apart from this, you only need to submit a few KYC documents along with your application..


8. Online application and loan management:
To simplify the application process, you have the option of applying online. Besides, once the loan is in effect, you can look at all the relevant details such as balance outstanding and interest statements through the lender’s online customer portal. Your unique customer ID and password will give you access to these details.


9. Value-added services such as property dossier, property search and customised insurance schemes:
When you opt for a home loan or a loan against property, you can avail assistance with regards to selecting the right property to invest in. You also get guidance on the legal aspects of property purchase and can enjoy a customised insurance plan. Instead of applying for insurance separately, part of your loan amount will go towards this.


While loans have become slightly more expensive with GST coming into play, if you pick your lender wisely, you will find that it is still one of the best, most affordable options for availing credit.


Additional reads on GST:
- How to File GST Returns
- Online GST Registration
- Advantages of GST
- What is GSTIN

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