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ATM withdrawals to loans: 5 places where you will have to pay more after GST

  • With the implementation of Goods and Services Tax (GST), the service charges and prices of other banking facilities are all set to increase
  • This includes credit card charges and insurance premiums
  • ATM transactions including withdrawals beyond free limits will cost 18%, up by 3% from the previous service charges
GST Five things you need to know about ATM withdrawals bank facilities after GST

With the implementation of Goods and Services Tax (GST), the service charges and prices of other banking facilities are all set to increase. The banks will pass on the tax rate over to the account holders, and therefore there will be a slight hike in the prices of the services. This includes credit card charges and insurance premiums. Here are a few services that will change now that GST has come into effect.

1)    ATM Withdrawals

ATM transactions including withdrawals beyond free limits will cost 18%, up by 3% from the previous service charges. State Bank of India (SBI) charges Rs 20 plus service tax (15 percent), for each withdrawal at banks beyond four free transactions. Currently, for withdrawing Rs 10,000, you need to pay a sum of Rs 20 (plus Rs 1,503 as service tax). Under GST, this transaction will attract a service charge of Rs 1,803.

2)    Auto and personal loan

EMIs on auto and personal loan will not go up. Service tax is not levied on them, so they will not be taxable under GST, according to an SBI official. However, the one-time loan processing fee and prepayment charges will go up.

3)    Non–maintenance of minimum balance, SMS and cheque book facility

Many banks charge fees for non-maintenance of minimum monthly average balance, SMS alert facility and issuance of new cheque books. Service tax is levied on them, and the fees for these too will increase. ICICI Bank has sent text messages to its customers that all such banking charges will be taxed at 18% compared to 15% earlier.

4)    Tax on insurance

According to a report by NDTV, the taxes on insurance is set to rise and will be categorized under different slab rates under GST. Birla Sun Life will increase Term/Health Plans and Unit Linked Insurance Plan from 15% to 18%. Traditional and endowment plans will attract 4.50% taxes in the first year, up from 3.75% earlier. From the subsequent years, it will attract 2.25% tax, up from 1.88%. The tax on single premium plans have shot up from 10% to 18%.

5)    Home loans and real estate

Home loan EMIs availed to construct a house or for rent or lease will attract GST. Sale of land, houses or buildings won’t have this new indirect tax attached to it. The GST will save construction companies and builders the triple tax they have been paying.  This will reduce the cost of construction. For home loan borrowers, a fixed GST of 18% is applicable, which is more than the current VAT of 5% for construction materials and the 3.5% service tax.
 

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