A Senior Financial Official from the Finance Ministry reportedly confirmed that free banking services like cheque book issuance and ATM withdrawals are likely to remain out of the ambit of the Goods and Services Tax ( GST ).
The Department of Financial Services had approached its revenue counterpart to clear the confusion over the levy of GST on some of the free services offered by banks to their customers. “The revenue department is likely to tell the financial services department that GST will not be levied on free banking services,” an official told PTI.
Recently, banks had received service tax notice for non-payment of the levy on free services. Following this, the revenue department had approached the Financial Services department seeking clarification as to whether these services would be subject to GST.
The DFS was of the opinion that services such as issuance of cheque books, account statements and ATM withdrawals are free up to a certain limit, and not commercial activities which cannot be brought under the ambit of GST, reports said.
The Indian Banks Association, on behalf of the management of banks, too had made a representation to the tax authorities.
The service tax notice for period 2012-2017 was served as tax officials were of the view that banks were not offering ‘free services’ but actually charging customers by asking them to maintain a minimum account balance. Every bank offers a different slab of minimum balance to customers, based on which some free services are provided.