New Delhi: Consumers will have to shell out more for banking services, insurance premium payments and credit card bills with the rollout of goods and services (GST) starting Saturday.
Under the GST, as of midnight Friday, most financial services would be subject to a higher tax of 18% compared to the current 15%. Banks and insurance companies have already sent messages and letters to their customers regarding the new tax rates that would be applied.
“Dear insured, the revision of the GST service tax will take effect from July 1, 2017,” a message from the Life Insurance Corporation of India (LIC) said. 2017, the existing 15% service tax levied on all banking services will be replaced with an 18% GST.
Common banking services that would result in a higher service tax include debit cards, money transfers, ATM withdrawals beyond the number of free services, mortgage processing fees, locker rentals , issuing duplicate checkbooks / drafts / passbooks, collecting invoices, collecting gas station checks, cash handling fees and SMS alerts.
In addition, life and non-life premiums would drop from 15% to 18%.
Canara HSBC Oriental Bank of Commerce Life Insurance Company’s CFO, Gaurav Seth, said the premium amount on a term insurance policy will be 18% from the current 15%. “In the event of an endowment policy, the premium for the first year is liable to be imposed at 4.50% with effect at midnight today against 3.75% in force and on the premium for the following year, it will increase from 0.38% to 2.25%, ”Seth said. .
Bank of Maharashtra CEO and Managing Director Ravindra P. Marathe said the GST would increase the costs of almost all services offered to customers. The nation will witness the official roll-out of the GST tonight on a live television broadcast from the central chamber of Parliament.
The deployment will be honored by President Pranab Mukherjee and Prime Minister Modi. Colleagues in Prime Minister Modi’s cabinet, including Finance Minister Arun Jaitley and others, as well as prominent dignitaries from the industry and acclaimed fields will also be in attendance.
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