The PMO (Prime Minister’s Office) is planning to convene a meeting of the chiefs of PSBs (Public Sector Banks) and Finance Ministry officials to resolve the issue of tax on free services provided by banks, reports The Hindu BusinessLine.
The tax department, under the Union Finance Ministry, has asked banks to cough up Rs 40,000 crore in taxes accumulated between 2012-17. This amount, which includes, service tax plus penal interest plus penalty, has been charged on the free services provided by banks to customers to maintain a minimum balance in their accounts.
Banks provide services like cheque leaves, ATM withdrawals, cash deposits, monthly account and locker visits, to customers to entice them to maintain a monthly minimum balance in their accounts. However, it should be noted that the government clarified in June 2018 that GST (Goods and Services Tax) won’t apply on the free services offered by banks.
The banks noted that payment of these taxes will increase their costs and render the provision of such free services, financially unviable for them. This could also lead to the closure of many accounts under the government’s financial inclusion scheme, Jan Dhan Yojana.
Since an attempt to resolve the issue between themselves did not yield results in June, a banker said that “the issue has now been escalated to the Prime Minister’s Office (PMO) for suitable intervention and resolution.”
As you are no doubt aware, Swarajya is, all in all, a reader-subscription-backed business model and in order to make sure we build a media platform with only the best interests of India at heart, we need your backing.
And in challenging times like this, we need your support now more than ever—to continue bringing you stories that are often shrugged off.
For us to invest in quality reporting and continue bringing you the right stories, it takes a lot of time and money.
Partner with us, be a patron or a subscriber. We need your support, throughout.