With the country ushering in a new tax regime with the introduction of the Goods and Services Tax (GST), consumers will now have to pay more for banking services, insurance premium payments and credit card bills beginning Saturday. Most of the financial services will attract a higher tax of 18 per cent as against the previous 15 per cent under the new indirect tax regime.
Almost all the banks and insurance companies have sent messages and mails to their respective customers about the new tax rates which will be charged. “Dear policyholder, revision of service tax on account of GST will come to effect from July 1, 2017,” said a Life Insurance Corporation of India (LIC) message.
Punjab National Bank (PNB) informed its customers that “with effect from July 1, 2017, the existing service tax of 15 per cent levied on all the banking services will be replaced by a GST of 18 per cent.” Meanwhile, HDFC said, “GST is being implemented from 1 July 17. In accordance, Service Tax of 15% will change to 18%. Provide GSTIN for your a/c @ firstname.lastname@example.org.”
Among the banking services that will attract higher service tax include debit card, fund transfer, ATM withdrawal beyond the number of free services, home loan processing fee, locker rentals, issuance of cheque books/drafts/duplicate passbooks, collection of bills, collection of outstation cheques, cash handling charges and SMS alerts. In addition, life and non-life premiums will see an increase from 15 per cent to 18 per cent.
Reflecting on the implementation of GST, Chanda Kochhar, MD & CEO, ICICI Bank said, “The Goods & Services Tax is a transformational structural reform which will have multiple benefits – the creation of a national market; enhanced ease of doing business; greater productivity & efficiency; and improved tax compliance. All stakeholders are working together for a seamless transition to this new paradigm. This reform will result in benefits for all participants in the Indian economy, including both businesses & consumers.”
At the stroke of June 30 midnight, India witnessed the introduction of GST at a special midnight ceremony in the Central Hall of Parliament. Prime Minister Narendra Modi described the GST as a “Good and Simple Tax” that will be “not only a tax reform but an economic and social reform as well” that will unify the nation, “check corruption and end harassment at hands of officers”.
Among the host of dignitaries who were present during the grand event included President Pranab Mukherjee, Vice-President Hamid Ansari, Speaker Sumitra Mahajan, Union Finance Minister Arun Jaitley, former Prime Minister H D Deve Gowda, ministers, MPs and other special invitees.
With inputs from PTI