The clarification follows the RBI’s directive issued in August 2023, which recommended that banks and NBFCs replace the term “penal interest” with “penal charges” to enhance transparency and communication between lenders and borrowers. Read more at: https://bfsi.economictimes.indiatimes.com/news/policy/gst-not-applicable-on-penal-charges-levied-by-banks-and-nbfcs-cbic-clarifies/117714949?ag=wappchnl&utm_source=wappchnl