GST rates: Banking services, insurance premium, credit card bills to get costlier
New Delhi: Consumers will have to shell out more for banking services, insurance premium payments and credit card bills with the goods and services (GST) rollout from Saturday.
Under the GST, effective midnight Friday, most of the financial services would attract a higher tax of 18% as against 15% as of now. Banks and insurance companies have been already sending messages and mails to their customers about the new tax rates which would be charged.
“Dear policyholder, revision of service tax on account of GST will come to effect from 1 July 2017,” said a Life Insurance Corporation of India (LIC) message. Punjab National Bank (PNB) informed its customers that “with effect from 1 July 2017, the existing service tax of 15% levied on all the banking services will be replaced by a GST of 18%.”
Common banking services that would attract higher service tax include debit card, fund transfer, ATM withdrawal beyond the number of free services, home loan processing fee, locker rentals, issuance of cheque books/drafts/duplicate passbooks, collection of bills, collection of outstation cheques, cash handling charges and SMS alerts.
Besides, life and non-life premiums would see an increase from 15% to 18%.
Canara HSBC Oriental Bank of Commerce Life Insurance Company chief financial officer Gaurav Seth said the premium amount on a term insurance policy will be 18% from 15% currently. “In case of endowment policy, the first year premium is liable to be taxed at 4.50% with effect from the mid- night today from existing 3.75% and on subsequent year premium, it will rise by 0.38% to 2.25%,” Seth said.
Bank of Maharashtra CEO and MD Ravindra P. Marathe said with GST will result in increased cost of almost all services offered to customers. The nation will witness the official rollout of GST in a live telecast tonight from the Parliament’s Central Hall.
The rollout is to be graced by President Pranab Mukherjee and Prime Minister Modi. Prime Minister Modi’s Cabinet colleagues including finance minister Arun Jaitley and others as well as eminent dignitaries from the industry and acclaimed fields will also be present.