ATM Withdrawals and Banking Services to Turn Expensive Under GST
Next time, before you step into an ATM to withdraw some money, you may have to tap into your memory to check whether you have crossed your free limits. Withdrawing money from ATMs have become costlier under the Goods and Services Tax(GST) regime as ATM transactions fall into the tax slab of 18%. Read on to know more about which of the financial services have been impacted by GST implementation.
Financial Services Under GST
Besides ATM withdrawals, financial services like cash deposits, demand drafts, and cheque book issuance will also become expensive under GST with the increase of 3% tax rate from the earlier tax slab of 15%. Several banks sent out an SMS stating that the existing service tax of 15% will be replaced by 18% under the GST.
Banks have passed on the hike to its customers which would mean a nominal increase in cost for the services provided by them. The increase of fees will also include for non-maintenance of minimum balance in the account, locker rentals, collection of bills, home loan processing fees, cash transactions beyond free limits, ATM withdrawals, cheque books beyond free limits and SMS alert facility.
Impact of GST On Insurance, Credit Cards, and EMI
Insurance premium policies will attract similar hike of 3% tax rate upon GST implementation. The policy holders currently pay 1.88% service tax on endowment policies and it will be hiked to 2.25% under the GST. Similarly, Credit Card holders may have to shell out extra money on monthly payments as the service tax is put under the slab of 18%.
As far as EMI payments are concerned, loans taken before GST will not fall under the new tax system. However, GST does not spell a threatening effect on the borrowers. Different loans fall in different tax structure without much altering the nominal rates. Hence paying EMI will not pinch your wallet under GST.
Benefits of GST
Despite affecting few industries with the higher tax rate, GST is set to bring an economic reform across the nation. Small to large businesses across the country will be enhanced with a single tax structure, paving way for creation of a national market. Unorganised sectors like real estate and textile will be regulated, resulting in transparent transactions and consumer satisfaction. Ultimately, GST is expected to make the Indian market more competitive in par with the developed countries.
It could be a cause of worry for some industries and might seem to be difficult for sailing during the initial stages of GST implementation. Nevertheless, it is expected to bring exponential economic changes in the long run.