Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,940.6556.15
Stock Analysis, IPO, Mutual Funds, Bonds & More

You will have to shell out more for banking transactions from July

These services were so far taxed at 15% and the hike in the tax rate means that individuals will have to pay Rs 3 more for every Rs 100 paid.

, ET Bureau|
May 20, 2017, 10.58 AM IST
0Comments
GST rates declared: Everything you need to know
MUMBAI: Transactions fees in financial services are likely to become more expensive after the government has put these under the 18% tax bracket in the new goods and services tax (GST) regime.

These services were so far taxed at 15% and the hike in the tax rate means that individuals will have to pay Rs 3 more for every Rs 100 paid for banking transactions, tax experts said.

“Financial institutions may be able to absorb this tax on behalf of companies which do bulk transactions but individuals will certainly have to pay more, though it is unlikely to have any large impact on demand,” said Sachin Menon, partner and head indirect tax at KPMG.

The government has categorised 1211 items under various tax slabs in the new GST regime. The broad range of tax rates is between 5% and 28% with some goods like milk, eggs, fresh fruits, vegetables, fresh meat, fish, chicken, stamps, judicial papers, printed books, newspapers, etc are exempt according to the government announcement earlier this week.

A large number of goods and services are kept under the 18% tax slab. Financial services are bracketed together with AC hotels that serve liquor, telecom and IT services, branded garments, flavoured refined sugar, pasta, cornflakes, pastries and cakes, preserved vegetables, jams, sauces, soups, ice cream, instant food mixes, mineral water, tissues, envelopes, notebooks etc.

“Overall it is a balancing act in the prevailing circumstances. Even insurance premiums will go up depending on the structure of the policy and how much of the premium is classified as risk and how much is classified as investment,” Menon said.

Banks will also have to register their branches state-wise under the new regime, unlike currently when branches were registered through the bank’s headquarters. “This will increase the compliance cost for banks initially,” Menon said.

Also Read

Public sector banks set to start doorstep banking

Share market update: Bank shares mixed; Axis Bank up 1%

Buzzing stocks: Vodafone Idea, Bharti Airtel, YES Bank, Axis Bank

Stocks like HDFC Bank, ICICI Bank & HDFC looking good

Stock market update: Private banks advance; RBL Bank over 1%

Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service