Bank Users Could Be Asked To Pay Tax For Every ATM Withdrawal, Every Cheque Issued!
Banks such as State Bank of India, HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank are among those, who have been asked to pay this tax.
The entire banking industry in India is right now pondering over a major question: Who will pay for banking services such as ATM withdrawals and cheques now?
This question has popped up, after a major decision by Directorate General of Goods and Services Tax Intelligence (DGGST) concerning ‘free’ banking services.
Now, the way banks respond this new tax directive can alter so many things for the consumers, and for the entire industry.
Free Banking Services To Be Taxed Now?
In a surprise move, Directorate General of Goods and Services Tax Intelligence (DGGST) has contacted all leading banks and asked them to pay tax on the ‘free services’ offered by them to customers.
Banks such as State Bank of India, HDFC Bank, ICICI Bank, Axis Bank and Kotak Mahindra Bank are among those, who have been asked to pay this tax. Other banks shall be soon contacted for the same.
As DGGST directive, retrospective tax, dating back to 5 years have been asked to pay.
An official said,
“Some notices have been issued and some are in the process of being issued. All banks taking these charges would be show caused..”
Now, banks are wondering how to collect this tax from customers. And if they are not able to collect, they will need to pay it.
Some reports indicate that banks will appeal against this new form of taxation.
What Exactly Is Being Taxed Here?
Every bank charges an amount from their customers if the minimum balance is not maintained. In lieu of this charge, banks provide basic banking services such as ATM withdrawals, chequebooks, online banking etc.
In case the customer maintains the minimum balance, then no extra charge is deduced, and the banking services are anyways offered.
Now, the tax authorities have determined that these services offered by banks have to be charged.
In case a bank incurs revenue after charging customers for maintaining low account balance, then tax on that amount has also been provisioned.
Last year in April-November, SBI collected Rs 1,771 crore charge for low balance maintenance fee, and such types of collections can now face tax scrutiny.
As per some estimates, banks can now be liable to pay up to Rs 6000 crore as tax, for the banking services and revenues from low balance charges.
An Axis Bank spokesperson has confirmed this new development, as he said,
“We are in receipt of the said notice, which we understand, relates to an industry-wide matter. We are, currently, engaged with experts to evaluate the observations made in the SCN.”
Banks are in huddle mode now, and trying to understand and figure out how to manage this: Charging this tax from the customers can backfire, as they are already paying for these services.
We will keep you updated.
Hi
What about the common man do ? Such a deceision come out. It is very hard to leading the life in every day
What about the banking free service in day today common mans life?
Every day and every thing has been charged for tax
Etc
When all pensioners get their pension from bank account, then they have to remain under shortage of cash if they do not withdraw money from bank. If they withdraw money then they have to pay tax. How social security system will maintain?
My understanding of this is that, the revenue that the banks generate by charging customers for not maintaining minimum balance, some banks also charge for issuance of cheque books, these charges are to be taxed under GST. Which I feel is right. Coz that is a loss of revenue to the Government. It is an un-taxed revenue for the banks and we are not even getting the desired services from these banks. It’s a good move, however the RBI being the controller needs to monitor that the customers are not inconvenienced.
Unless RBI issues an official notification, these are to be treated as rumour spreading by vested interests to discredit the Government. Do not believe such rumours spread deliberately on the eve of General Elections.
Move to push towards Digital payments! But 5 transactions ATM/cheque,etc. per month should be free. The older generation can’t use PayTM, freecharge,MobiKwik,etc. and they should not be forced.
agreed…
Actually speaking there is absolutely no value addition because of the banks to the customers, banks are essential for the government to keep track of the economy, so if at all there is a crunch of finance it has to be borne by the Govt. If they try to tighten this screw, then we will only be ending up with more and more money not coming into the bank, this will defeat its own purpose.
Well according to me this move is not really a good one, as the customers are paying for everything already, like getting an debit card (some type of cards are being charged on an yearly basis), maintaining low balance and for FD and RD etc. Now if the customers have to pay for using ATM or issuing Cheques, it will be a disastress. First of all, if this move is direceted towards digital India, then we need to have a proper 4g network. These networks are not working when we are inside the mall or at the basement, or inside our house etc. if we have to pay through the app, how are we to do if there are no network?
having our bank details linked to paytm, rupay or any other such app through mobile, is it really safe for using it without having any proper security? They first need to take steps for increasing the security measure when we link our bank details or card details through these apps, then comes the digital money, before taking the first step and immidiately going for the final step is like a foolish move if you ask me.
I see a big disconnect between the content of the article and its title. The content says the tax demand is on fees collected for not maintaining minimum balance whereas the title says the taxation will be on every atm withdrawal or cheque withdrawal. Or am I not getting the intent of the article at all?
They should not charge from the customer as already paying so many charges on banking facilitating.
So request to due the charges rather putting directly on the customer.
Are we going to be charged for credit card services too..coz standard chartered bank has been charging GST recently from back dates.
taxing the common man for every ATM or cheque withdrawl is nothing but extortion by BJP govt They have not don any thing good for the common man This govt is hopeless and worse than Congress
It will encourage consumer to keep cash in hand and avoid bank channels as much as possible for all small transactions.large transactions are mostly through. Digital mode now.
Stupid modi government.. Only knows how to take out money from the public.. Stop becoming fool and step forward not to elect him in future.. Save india save people
Really very very sorry state of affairs. The govt. instead of getting back thousands of crore of tax payers money from fraudusters/scammers, wants to loot the common man off their hard earned money. Are we living in a banana country ?
This is ok for computer savvy persons who are well versed in online banking/ computer but not for people like us who are senior citizens and prefer the traditional ways – issuing cheques and drawing cash. It is therefore suggested that Sr. citizens be exempted
Bank Transcation Tax should be applicable only if the Individual Income Tax, is removed in the country and cash transaction are considered to be completely illegal in this country above Rs 300. 00 , In this method all non tax payers will also pay taxes by way of Bank Transaction Tax. Corporate Tax should be also reduced to 20% in order to show more profitss and to provide more dividend to share holders. Yes this BTT ( Bank Transaction Tax) is worth only if Personal Income Tax to Individuals is abolished to bring all Indians under one regime.
;-) It seems making fools not limited to April . Starting with this every time when we Issue cheques or with drawing money we are going to be fools.!! after paying service charges also expecting tax on them wold be very rude decisions. I should not say this but collecting huge penalties and peanuts from customers and will keep it in one blackcurrant hand. Great thought!!
My first thought was….belated April Fools’ joke :)
…but no…..after thinking about it, it makes sense – this is more of a push towards Digital payments! If you have to pay for cash and cheques, you will use PayTM, and MobiKwik, an….. etc etc, more of their ilk more….and THAT sounds Pretty Good to *me*! :)
Good for whoever did it.
This is utter nonsense rule.
Already we are paying too much in terms of GST on everything like non maintenance of minimum balance, PNB charges for any NEFT or RTGS transactions, then what is the use of digital or online transactions.
If we use PayTm or Mobiquick, they also charge ad they are private players. Moreover, we need to top up and that too there is a limit. We need cash for any urgent repairs works at home or to any roadside vendor or grocery shop we need cash.
Earlier there were tellers at bank , not ATMs, then why taxation of our hard earned.
Where can we maintain our money and withdraw from. Amount deposited in banks is already after tax, so it becomes double taxation. Just British raj, people used to fight them to get independence from their atrocities, now do we need to our own Indian people and government; shame on it.
And they say vote wisely, it is precious; impossible.
If it is precious, I am wasting by voting on atrocious people.
Lol….. Get ready to face the wrath of already messed up customers………… . Definitely expect the unexpected response :p