Indian Bank customers are in dilemma that Banking services will come under GST which might bring them more money to be paid. However this was cleared with latest statement from IT department.
Income Tax Dept. won’t charge any
GST on free banking services like ATM withdrawals and usage of cheques. It is a big relief for the banks, as they were expected to pay up to Rs 45,000 crore on tax, retrospectively.
GST on free banking services like ATM withdrawals and usage of cheques. It is a big relief for the banks, as they were expected to pay up to Rs 45,000 crore on tax, retrospectively.
No GST on Free Banking Services :-
Income Tax Dept. last month had issued a notification wherein every bank was ordered to pay GST on free banking services rendered to bank customers who are maintaining minimum bank balance.
As per the new diktat, banks were supposed to pay GST on services such as ATM withdrawals, cheque book issuance and more. The tax was supposed to be collected retrospectively, ever since GST regime came into force last year.
IT Dept. has issued a new notification, as per which, banks have been exempted from paying GST on these free banking services.
Latest Notification read as " …where the services are supplied by a supplier without consideration to an unrelated recipient or a person other than a related or distinct person, the same would not amount to supply and not liable to GST"
Govt. had informed that there shall be no GST at duty-free shops, albeit this exemption is only for foreigners.
As per Pratik Jain, leader-indirect taxes at PwC India, it is not clear whether ‘show cause notices issued to banks under service tax are withdrawn or adjudication will be continued.’
Govt. has also declared that henceforth, there shall be GST on
Exit loads charged by Mutual funds
Interest charged on default loan payments
Late payment charges levied by credit card companies
No GST on:
Securitisation
Future contracts
Derivatives
Forward contracts in commodities
Food & rashan in gst system
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