Indian banks are faced with the prospect of paying GST (goods and service tax) on the ‘free services’ it provides to customers maintaining the minimum balance in their accounts. An Economic Times report citing the CEO of Indian Banks’ Association said that top lenders like SBI, ICICI Bank and HDFC Bank are planning on passing on the burden to consumers.
The banks intend to not only recover the charges for the last five years but may also increase its charges across the board to pay the taxes. This is because considering the significant size of the charges, recovering these just from those maintaining minimum balance would be difficult and one can expect an increase in charges across all services in the coming days.
The tax department in the last two months issued preliminary notices to banks seeking GST levied on the issue of services like checkbooks, additional credit cards, ATM usage, and others which the lenders provide free of charge to its customers, the report further said. How the banks plan on charging its customers and how much, will vary from one to another and also on how they value these free services.
A Bloombergquint report suggests that the bank association is taking up the issue with the government. It also said that the total principal amount that is being sought from all the banks put together is Rs 15,000 crore and is expected to go as high as Rs 35,000 crore if interest and penalty are considered.