In a recent announcement done by the government, now there will charge on the late payment of the credit card bill of 18 percent. It was also mentioned that there will no charge on ATM and issuing of the chequebook. The GST is also applicable on ATM transactions after the free 5 limit including ATM enquiry and balance receipts.
Ministry of finance cleared the air over this issue, by releasing the frequently asked question in which it mentioned the procedures and charges related to banking, insurance & staff.
Also, the securitisation and derivative contracts are out of GST which makes a freeway for the services offered by the banks. Earlier, the GST department had sent notices to the private banks for paying GST on the free services. The notice was regarding the taxes due for the time period between 2012-2017.
After which the finance department pleaded to the revenue department to not to tax the free services as the banking services come under the financial and revenue department as both the departments are further into the finance department.
Problems in Taking Taxes of Backdate
- The account holders were the liable people who had to pay taxes to the government and the banks but the major issues were that there were loopholes in collecting the taxes from the customers of back dates. No one was ready to pay the taxes of which they had taken consumption.
Read Also: GST Charges For Cheque Bounce By Banks (Inadequate Balance & Non-Financial Reasons)
Is it that Free Services Don’t Come Under Commercial Activity?
- In the taxes union meeting, almost all the experts and banking officials said that the free services cannot be considered for the taxation and government should ease the liability in the light of this fact.
- But there was another point made by the tax officials that the banks do always collect the money as minimum balance and according to the deemed services, this amount is taxable.
Flipkart Got the Clean Chit
In the early days, e-commerce company Flipkart faced a hard time in the tax scandal of 110 crores over the tax on discount. The tax department considered the discount amount as capital expenditure and made a notice towards, however, the income tax appellate tribunal cancelled notice.
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