GST on ATM withdrawal fees: The newly implemented Goods and Services Tax (GST) that was officially launched by President Pranab Mukherjee and Prime Minister Narendra Modi has not just impacted various business industries, but also affected the financial transactions costs.
GST on ATM withdrawal fees: The newly implemented Goods and Services Tax (GST) that was officially launched by President Pranab Mukherjee and Prime Minister Narendra Modi has not just impacted various business industries, but also affected the financial transactions costs. Banking services including ATM withdrawals, cash deposits, demand drafts and cheque book issuance has turned costlier under the new tax regime. According to a report by DNA, the service tax for the banking transactions, which is currently at 15 per cent, will now go up to 18 per cent. The revised rates would be applicable for servicing charges, annual maintenance contracts which will have to be borne by the banks eventually.
Days before the Bharatiya Janata Party (BJP)-led NDA government announced the GST launch in a special midnight Parliament session, top bankers of the country met the GST council to get further clarification on the revised tax rates. “For all our services, we have to put the cost of the service plus the service tax. Under the GST regime, this will get converted into the cost of the service plus the GST, which will go up from the existing service tax rate of 15% to 18%,” DNA quoted SBI chairperson Arundhati Bhattacharya as saying.
Reports say that changes in the tax slabs means for every banking transaction of Rs 100, each customer will have to pay Rs 3 more. Customers are currently paying 15 per cent service tax for cash deposit, ATM transactions, credit and debit cards, insurance premiums and EMIs.
A day before the GST launch, SBI had even sent SMS to its customers informing about the higher incidence of tax. The text read: “Important: The Government of India proposes to implement the GST which is likely to be effective from July 1, 2017. Consequently, the existing service tax rate of 15 per cent shall be replaced by a GST rate of 18 per cent.”
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Even other private banks of the country including Standard Chartered and HDFC have sent alerts related to GST to their customers. ICICI Prudential Life Insurance, in email messages to its customers, said premium payable on term policy and fund management charges on a Unit Linked Insurance Policy will attract 18 per cent GST post implementation of the new indirect tax regime, reported PTI.
As off now, customers pay 1.88 per cent service tax on endowment policies, but now GST will be levied at the rate of 2.25 per cent on premium payment for endowment such policies.