Will have to pay tax for ATM Withdrawal and Cheque issued – Know more

Will have to pay tax for ATM Withdrawal and Cheque issued – Know more

Directorate General of Goods and Services Tax Intelligence (DGGST) has intiated for free banking services to promote Digital India. However Banking sector is in dilemma who will pay for ATM withdrawals and cheques services.

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It is being rumored that
Free Banking services too be taxed all the way. Directorate General of Goods and Services Tax Intelligence (DGGST) has contacted all leading banks and asked them to pay tax on the ‘free services’ offered by them to customers. As DGGST directive, retrospective tax, dating back to 5 years have been asked to pay.

Official told ” Some notices have been issued and some are in the process of being issued. All banks taking these charges would be show caused..”

What is Taxed here :-

Every bank charges an amount from their customers if the minimum balance is not maintained. In lieu of this charge, banks provide basic banking services such as ATM withdrawals, chequebooks, online banking etc.

In case the customer maintains the minimum balance, then no extra charge is deduced, and the banking services are anyways offered.

Now, the tax authorities have determined that these services offered by banks have to be charged.

In case a bank incurs revenue after charging customers for maintaining low account balance, then tax on that amount has also been provisioned.

Last year in April-November, SBI collected Rs 1,771 crore charge for low balance maintenance fee, and such types of collections can now face tax scrutiny.

As per some estimates, banks can now be liable to pay up to Rs 6000 crore as tax, for the banking services and revenues from low balance charges.

Axis Bank spokesperson said ” We are in receipt of the said notice, which we understand, relates to an industry-wide matter. We are, currently, engaged with experts to evaluate the observations made in the SCN.”

Source by:-techiyogiz

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