Now GST will be applied on each and every transaction. Banks like HDFC Bank, Axis Bank, State Bank of India and Kotak Mahindra Bank have been ask to pay tax.
Goods and Services Tax known as GST launched by prime Minister of India have affected gradually on many business industries. This can be seen over financial transaction also.
“GST” makes “ATM” Transaction More Expensive NOW
Now the major banking industries of India are asking “Who will pay for free & limited banking services such as ATM withdrawals and cheques?”
This question has created a tense environment when it was asked by Directorate General of Goods and Services Tax Intelligence (DGGST).
Free Banking Services Gets Expensive
The jump which leaps over 3% more expensive can alter many things for consumers, and this can majorly affect entire financial industry.
Free banking services which are payable now includes services like ATM Withdrawal, Cash Deposit, Cheques and Demand Drafts are assured to be more costlier than before under the influence of this leap.
When the DGGST directive asked to pay, an official responded like,
“Some notices have been issued and some are in the process of being issued. All banks taking these charges would be show caused…”
Now the simple logic goes like, how to collect this tax from bank customers, and if the bank is unable to collect such amount then, they have to pay it by their own.
Whereas there are few reports which are indicating that the banks will appeal against this new taxation rule.
Who is Majorly Affected Here?
Every bank provides various free banking services such as ATM Withdrawal, chequebooks, online banking, Cash Deposit Etc. Which is carried out by the bank, when they deduct certain charges if minimum balance is not maintained.
Hence all the customers maintains their minimum balance in order to enjoy free services which are offered by bank.
Now, the authorities has declared that all the free services will be charged.
In any case bank suffers even after charging their customers for maintaining low balance, then tax on the amount will be carry forward.
As per SBI, last year the bank have collected an amount of Rs 1,771 crore as low balance maintenance fee. All such kind of collections can be inspected.
Banks can be liable to pay an estimate amount of Rs 6000 crore as tax collection, for free banking services and low balance charges.
Axis Bank has confirmed their new development as:
“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.”
All the banks will be piling up now, and trying to figure out how to manage and get out through this. As all the customers are already paying for their low balance availability, charging more can backfire, which can never be a second thought in this existence.
We will get back to you with new update soon..!