Even though it's been 18 months since Goods and Services Tax (GST) was launched in India, many people are still not sure on which services offered by banks attract GST. As confirmed by the officials of Central Board of Indirect Taxes and Customs (CBIC), GST is not levied on free banking services like ATM withdrawals and cheque book issuance.
There are certain services on which banks levy charges on customers and GST is levied on them. In this blog, we will discuss the charges on which GST is levied.
Banking services attract a GST rate of 18% in India.
If you fail to pay credit card bill on time, you will be charged late payment fees. Late payment fees charged by banks, attracts GST. If the late payment fee is Rs 500, you are required to pay 18% GST on it. So, it is advisable to pay your credit card bills on time to avoid penalty + GST.
See Also: How To Use A Credit Card?
If you default in the payment of loan EMIs, you will have to pay charges along with GST. So make timely repayments to avoid all these hassles.
In the case of cheque bounce, you have to paycheque bounce charges to the bank along with GST. So before handing out those cheques, make sure to check your bank account balance. Along with the cheque bounce charges, the account holder will also be subject to legal proceedings.
As per rules, the convicted individuals will have to serve up to 2 years in jail or punishment amounting to twice the cheque amount or both. The legal action can be taken only if the cheque has bounced due to inadequate funds. Other reasons like missing signature or date will not attract legal proceedings.
Every month you will be provided a certain number of free ATM transactions by your bank. Once you are done with free transactions, you will be charged for each transaction you carry out at the ATM. Even these charges attract GST. You are required to pay the GST along with the charges.
You will be charged an additional fee for making cardless cash transactions at the ATMs and this additional fee attracts GST. In case your transaction is declined due to insufficient balance in your account, you will be levied charges along with the GST. If you cross the free monthly cash deposit, you will be charged a penalty along with the GST.
See Also: Disadvantages of using a credit card
GST is levied by banks for the life insurance policies issued to the NRIs (non resident Indians). The GST is charged because the premium is received via the Non-Resident External Account. The payments are made in Indian rupees and are not convertible to the foreign currency.
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