No GST on these services

New Delhi, June 04: Here is good news for people, Tax authorities have made it clear that free service - such as a certain number of ATM withdrawals, issuance of cheque-book or account statement provided by banks - will not attract Goods and Services Tax (GST).

But charges for late payment of credit card dues and additional interest charged in case of default in EMI payment will attract GST.

This clarification has come after the Department of Financial Services and Department of Revenue were not on the same page regarding the imposition of GST on services such as free ATM transaction or issuance of cheque-book.

In fact, tax authorities have issued notices to many banks asking them to pay tax on free services as they are subject to 'maintaining minimum balance'. After all these notices, the DFS had approached the revenue department, seeking clarity on whether such services would attract GST.

Now, the Central Board of Indirect Taxes and Custom (CBIC, which was previously known as Central Board of Excise and Custom, or CBEC) has issued detailed Frequently Asked Questions (FAQ) on issues related to the financial services sector.