IMPACT OF GST ON BANKING SERVICES
Banking Sector is one of the largest service sectors in India. Transaction fees in financial services including credit card payments, fund transfer, ATM transactions, processing fees on loans etc., is increased to 18% tax bracket according to the new GST Regime. It implies that individuals will have to pay Rs 3 more for every Rs 100 paid as charges/fees for banking transactions. Banks now apply transaction charges on cash withdrawals from different bank ATMs or cash withdrawals from a branch, however first 5 transactions are free.
Bank branches provide services to each other, which will be taxable under GST. However, this will increase the paperwork and the operating cost also. The business consumer can claim ITC on the banking services paid on their business accounts. The GST will be on Total Expense Ratio (TER) of the mutual fund and it will increase by 3%.
Under new GST regime, all records have to be maintained for each state separately, which will be cumbersome. For instance, if a bank has multiple branches in one State, only one registration is required for all the branches in that State. Therefore, the government should provide an alternative scheme to the banking sector to reduce the burden of the banking sector.
Bank branches usually conduct transactions, both inter and intra-state transactions, therefore determining the place of supply will not be easy. The banks need to decide whether the payment is against CGST, SGST, and IGST based on the type of transaction, that is whether it is an intra-state or inter-state transaction.
In case you want further information on the bank information, you can consult the GST Experts at MyGSTzone. You will get comprehensive assistance on GST Registration and GST Return Filing in Chennai. You can also log on to GST Portal for further queries on GST Matters and hire a GST Expert.