Customers will have to pay more for banking services such as debit card, home loan processing fee, locker rentals, issuing of cheque books, cash handling charges and SMS alerts would attract higher tax rates under GST.
The Narendra Modi-led government implemented the next tax regime earlier this month under which all financial will be taxed at 18 per cent against a service tax rate of 15 percent earlier.
What GST means to SBI customers?
State Bank of India (SBI) has revised service charges on ATM withdrawal for users of its mobile app ‘State Bank Buddy’ effective June 1, according to NDTV.
SBI has said that Rs 25 plus GST will be levied for withdrawing money from an ATM through State Bank Buddy. If you transfer funds from app SBI Buddy to your savings bank account then you have to pay a charge of 3 per cent plus taxes, the public sector lender said in a release.
Online fund transfer through Immediate Payment Service (IMPS) will now be charged Rs 5 plus tax for amounts of up to Rs 1 lakh, Rs 15 plus tax for above Rs 1 lakh and up to Rs 2 lakh, and Rs 25 plus tax for above Rs 2 lakh and up to Rs 5 lakh.
Customers (with Basic Savings Bank deposit) will have to pay Rs 30 along with 18 per cent GST for a 10-leaf cheque book, Rs 75 with GST for 25-leaf cheque book and Rs 150 plus tax for a 50-leaf cheque book.
Charges on ATM cards
SBI said that issuance of new debit cards will be charged from June 1 and only the RuPay classic card will be issued for free.
Exchange of soiled notes
If a customer wishes to exchange of more than 20 soiled notes or if the total value of soiled notes is above Rs 5,000, SBI said it will charge Rs 2 plus tax for every soiled note.
“Banks are not in the position to absorb the increase in costs due to GST. It will be a small hike for customers. There will be an increase in costs for us except for the interest cost on deposits. Hence, banks will pass it on,” said a senior SBI official to Deccan Herald.
- Service tax of 15% replaced with GST tax rate of 18%
- Rs 25 plus to be levied on ATM withdrawal via State Bank Buddy
- Pay Rs 30 along with 18 per cent GST for a 10-leaf cheque book
- SBI will charge Rs 2 plus tax for every soiled note
What does not change
All normal saving bank accounts in a month will continue to get eight free ATM transactions (5 at SBI ATMs and 3 at ATMs of other banks) in metros and 10 free transactions in non-metros (5 at SBI ATMs and 5 at ATMs of other banks), SBI added. If you exceed the permissible limit, a charge of Rs 20 plus taxes will be levied for each additional withdrawal.
ICICI Bank’s SMS prior to GST launch
Dear Customers, “the government of India has announced the implementation of the Goods and Services Tax (GST), which is likely to be effective from July 1, 2017. Please note, the existing service tax rate of 15 percent for ICICI Bank Credit card shall be replaced by a GST rate of 18 percent as applicable for banking and financial services.”
Kotak Mahindra Bank SMS prior to GST launch
Important announcement: The Government of India proposes to implement the Goods and Service Tax (GST) which is likely to be effective 1 July, 2017. Consequently, the existing service tax rate of 15 per cent shall be replaced by a GST rate of 18%.
Rumour vs Reality
While GST tax rate of 18 per cent has been put in place for banking services, customers need to be wary of rumours concerning the new tax regime. Revenue Secretary Hasmukh Adhia, the architect of GST rollout, took to Twitter last week to bust some myths that are doing the rounds. “A wrong message is doing rounds on social media that if u make payment of utility bills by credit cards, you will be paying GST twice,” Adhia said.
“This is completely untrue,” the revenue secretary clarified. He also urged people not to “recirculate such message without checking it with authority.”