Customers who maintain a minimum balance in their accounts will now have to bid a goodbye to the bank freebies. According to reports by Economic Times, the government is all set to levy GST on the usage of free services like ATM, usage of credit cards and chequebooks. All top banks such as State Bank of India, ICICI Bank and HDFC Bank are planning to pass the cost to the account holders.
The tax department in the last two months has sent preliminary notices to the banks. The notice seeks to levy good and services tax on the services such as issuing chequebooks and credit cards, ATM usage and refund of fuel surcharge. The GST notices released in the last two months are different from the ones issued in the April where the banks were to recover about Rs 40,000 crore in service tax and penalties.Read more ↓
“Most banks are now considering passing on the GST cost to the customer. This would be a pure pass-through and the amount would go directly to the government,” VG Kannan, CEO of the Indian Banks’ Association, told ET. “How much the customer would be charged would differ from one bank to another as that would depend on how the free services are valued.”
1. GST on ‘free’ services soon
Banks receive preliminary notices to levy GST on ‘free’ services.
2. Banks to charge account holders
SBI, ICICI, HDFC Banks considering to pass the cost of the freebies to customers
3. Usage of ATM will be also taxable
The services like Cheque books, ATM usage, refund of fuel surcharge and additional credits will fall under the tax category
4. 18% GST to be charged
Most of the banks have agreed to charge 18% GST for the banking services.
5. Customers maintaining minimum balance will be charged
According to the tax department, customers maintaining a minimum balance will be charged for the services that have a deemed value.