GST on Banking & Other Financial Services 5 Things You Must KnowSince 1974, the Goods and Services Tax has been one of the largest tax reform in the country. And now the GST has come up affecting different sectors including banking and other financial services. As a result of GST, the influence has been concerned with issues regarding banking and nonbanking sectors related to fund releasing and other insurance services. And here you will find 5 things that you must know related to the GST on banking and other financial sectors.
1. Assessment and adjudicationThe major impact of GST has adversely affected the banking sectors and other financial services in terms of an evaluation process. Within a any state, only one branch need to be registered and all the maintenance will be taken by that branch. At the same time, all the concerned banks or other financial sectors should get registered in order to do their transactions. As the complete decision making is focused on a particular authority which may lead to prolonged decision making that has the adverse effect on assessment.2. Separate registrations for all branchesBefore the GST, both the banking and the non-banking sectors are not concerned to register for each and every branch within the state.
But once the GST has been implemented, there is a drastic change that took place giving notification for all the branches to be registered separately under the authority. Therefore the tax is collected in all the states along with the credit tax which was paid at the end.3. Critical to examine the base of supplyIn fact, the GST is the platform for the tax regime. While considering any transactions the bank is completely dependent on the examination of consumption regarding GST and its payments.
This has led to many misconceptions and restricted cash flow. And it’s quite difficult for the banks to determine the type of transaction and process it accordingly. At the same time, the transactions between two branches located in the same state are also adversely affected by the GST.
4. Taxation on interestAt present, there is no tax interest applicable for any sectors but with the push of GST, the taxation on interest has affected significantly. And the government all over the world is not imposed with GST on interest making it an issue has to decide whether it is time value of money or concerned with lending money.
5. GST payments concerned with applicable ratesAs the GST has been imposed the services are assumed to have 18% GST. For present service tax rate of 15%, it has the higher rate of 3%. This lead to difficulty in banking sectors along with the taxes that are applicable on commodity along with a concession GST rate is also expected to be implemented. Hence, the banking and other sectors should concern while paying GST applicable rates on the certain type of product.