Wednesday, September 30, 2020
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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.


Sourcetrak.in

20 COMMENTS

  1. It will be ridiculous if the financial ibstitue which govern by rbi and they are charging atm and cheque related charges so customer will be effect but in cheque book related charges may be applicable there is no hesitate but in atm than why are you spending so much rupee on CBS system than also go back last t0 years system so it will be OLD I’D GOLD

  2. It will be ridiculous if the financial ibstitue which govern by rbi and they are charging atm and cheque related charges so customer will be effect but in cheque book related charges may be applicable there is no hesitate but in atm than why are you spending so much rupee on CBS system than also go back last 40 years system so it will be OLD IS GOLD

  3. In the yesterday years bankers were afte citizens of India to open acts and keep deposits , which they stated as safe. Now a days banker is charging for almost all transaction. It is not a social service they are rendering but doing business for deposits ,and also for withdrawing their own money in addition to the new gst also. This is in appropriate when compared to the large amt defaulting big lenders.

  4. WHEN BANKS DO NOT HAVE CASH IN THE ATM FOR WITHDRAWL BY CUSTOMERS. WILL ALL THE BANKS AGREE TO PAY CUSTOMER FOR THE NEGLIGENCE OF SERVICES PROVIDED WITH GST FOR THE PROPER BANKING SERVICES . PLEASE ANSWER & THEN CHARGE THE CUSTOMERS AS CUSTOMERS ARE TIRED OF PAYING FOR THE POOR SERVICES PROVIDED BY BANKS INSIDE & OUTSIDE

  5. What is the purpose of maintaining bank accounts. We would better keep cash at home,Person seating in these offices needs replacement as they are behaving lunatics. One side cashless dealing are being encouraged to reduce the cost of printing notes. Now we have to pay to draw these money out. Making online payment we are being charged now drawing cash we will be charged. Just ridiculous.

  6. Charging GST for the services rendered by bank does not seem to be justifiable. We are depositing our money in bank account which the banks use for their needs and allow us to withdraw as & when required either through ATM or cheque.This is may be termed as transaction for mutual benefit and if you call it a service then individual do service to bank by depositing his money & bank in turn to the individual. If the govt. think of taxing this transaction then the very purpose of Jan dhan yojana of PM etc will be a total failure as people will start hoarding money in their personal lockers and most of the banks will go dry & less cash digital change over will be a dream. Govt. if they want to abolish IT & levy transaction tax less than a % it may be acceptable as GST but not otherwise. Banks should not agree to the GSTdemand and fightout the case in appropriate legal forum & if required with FM & PM.

  7. I have no salary account, I can have all cash transactions, why should I have a bank account?
    I see no benefit in having a bank account but lots of charges and taxes in having it. Already many charges are being taken by bank, any more charge, and I will close all my accounts.

  8. Regarding substantial and repeated withdrawals from ATMs, it is quite possible that during the demonetisation, those who used the bank accounts of their domestic helpers as well as other known contacts, may be withdrawing to return such deposits.

    It is suggested that the Banks may take up the charge for dishonoured cheques of their customers to file complaint / matter under 138 at nominal charges as the lawyers are exploiting and are charging substantial even to the extent of 25% plus and that too takes several years to get the money

  9. tHIS GOVERNMENT WILL ELIMINATE MIDDLE CLASS THE BACKBONE OF THE ECONOMY AND THE BANKS WHICH ARE SUPPORTERS OF THE ECONOMIC DEVELOPMENT.GREED OF THIS GOVERN,MENT WOULD SPELL THE RUIN AND IT HAS ALREADY STARTED.

  10. If this is the case , then
    (1) why to keep money in the bank? Handle your own money yourself without paying service taxes.
    (2) Approach the banks only for limited urgent purposes. In other words boycott bank services.
    (3) salary be paid to the service class people (govt. as well as private) in cash?

  11. If the extra taxation is to be paid by customer then the banking service will be going in ditch. Govt. Should take back it’s decision immediately.

  12. It may lead another failure of businessmen run Govt. who are more in favor of rich countries & never giving chance to run for common men out of their earning ,who cultivate ,run industries out of their blood but for the shake of country ( actually we are not yet independent in real term ) ;our leaders could not attract common men except using their faithfulness /simpleness paying every respect to rich community and could not take part in building own country /unable to join hands with Govt. policy ;on the contrary , our country, dominated by business community / their advisers -Munsis ,yes men to own zaminders /kings as well as used these leading people in the hand of foreigners . The proposed policy may lead / tending avoid digital dealing which was never taken in + ve way , again tendency may creep to promote expenditure not thru banks and again accumulate cash not going to bank who gives pain to each customer (as if they can exist without involvement of their customers /common men ) (what will be wrong to avoid increased expenditures as being proposed thru income gained by govt thru cheque /using ATMs) & it is usual tendency to go against govt if proper reasons r not clear )
    & avoid involvement of bank until unless cash deal in vegetable ,grocery markets /clothe merchants / etc etc cash to cash deal at each place will get promotion such that no tax is to be paid ;flats constructions /sale /purchase etc a good chunk of cash dealing is done still now in broad day light many politicians political meetings / huge expenditure based propaganda is increasing like epidemic : Govt tried to earn from retailers in good nos on the foot path shop keepers by promoting paytm etc which m/c never worked (open secret ) ;these shop keepers never , in the name of poor share nothing out of huge amount of selling per day ;Starting from UPA / NDA tried to give berth to Malls where all varieties products to get sell records and taxes could have been possible may be [govt having duplicate policies as political leaders /ministers had less control over qualified honest officers closed govt run huge super bazars giving nothing to achieve unrecorded personal money out of these huge shops for political purpose /causing closing of huge super bazars etc including private Malls etc.

  13. If this type of tax imposed on account holder .Then bank industry ready to close down bcoz all saving account holders forced to closed account and all expenses done in cash,no saving by holders ,huge loss of revenue to govt.employees forced to get salaries in cash,no cash records,public on roads,

  14. The logic of taxing all transactions is not clear. Yes,if the banks levy certain penalties or charges for services rendered,they may be taxed for that component. Obviously the customer has nothing to do with the tax liability.

  15. if every one recollects the past , ATM services are helpful to user as well as reduce the work of bank employees. Olden days we used to stand on big ‘Q’ to get the money . Its a mutual benefit. As we are already paying money for services no point of charging additional tax on this activity. Every organisation is looking for money generation areas and its part of that . nothing else. Please rethink before implement any money collection ways. If again all users go to bank and stand in Q just to avoid the Tax imagine the situation. Are we going back or going forward?

    Its just my view!!

  16. Atm services are charged annually by all the banks( one year free in some banks). Cheques whenissued beyond a certain numbers in a year are charged. Why this hue and cry? The Taxation is on this unaccounted cash flow of the banks

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