India has changed to the Goods and Services Tax regime on July 1st. the newly implemented GST, though has not just impacted various business industries, but also affected the financial transactions costs.
Under the GST, banking services including ATM withdrawals, cash deposits, demand drafts and cheque book issuance has become costlier than the old 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.
“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.
Reportedly, for every banking transaction of Rs 100, each customer will have to pay Rs 3 more under the new indirect tax regime. 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.”
