18 Dec 2018Posted By: Mudit Handa

GST likely to be charged on “Free Banking Services”

The overall impact of GST on our economy has been indeed very constructive till date. This can be perceived from the booming tax revenue and noticeable fiscal consolidation during this financial year.

Almost all goods & services have been covered under the GST. Nonetheless, there are some services that are essential for the general public and these not to be taxed. Taxation on such services can increase the load on common man’s shoulders. In the view of aiding the small traders and taxpayers having GST registration, the GST Authorities in the 27th GST council meeting that was held on 4th May 2018 had decided to keep the free banking services like issuing chequebooks, credit/debit cards and ATM withdrawals etc. out of the GST.


#1. Whether the free banking services to be taxed under GST?

At the 27th GST council meeting, the Department of Financial Services had cleared all doubts regarding GST on the free banking services.

  • It was decided that such services shall remain out of the GST ambit.
  • However, a few leading financial institutions including State Bank of India, ICICI and HDFC Bank have proposed that GST liability on ‘free services’ must be transferred to the borrowers.


#2. Why should borrowers face GST liability on ‘free banking services’?

GST liability on ‘free services’ provided to account holders having a minimum bank balance has to born by the bank themselves. Hence, the prominent financial institutions have considered passing this cost to their customers.  


#3. Will now the ‘free banking services’ be taxed under GST?

Yes, GST is likely to be levied on such free banking services. Since the past 2 months, the GST department has already issued preliminary notices to commercial banks for levying GST on services such as-

  • Issuing chequebooks
  • Additional credit cards,
  • ATM usage and
  • Refund of fuel surcharge

In this regard, a senior official of Indian Banks’ Association (IBA) has also stated-

“All leading banks will now consider transferring the GST cost to the borrower. This would be a fairly done and the GST amount so charged would go directly to the government. Moreover, this would not cause an additional burden on taxpayers having GST registration.”



#4. Which banks have agreed to charge GST on ‘free banking services’?

Very importantly, many commercially banks have already agreed to begin charging GST@18%  on the free services. According to an MNC Bank official-

“We have agreed in principle to start collecting GST from borrowers. The system, however, needs to be worked out. The larger banks having GST registration are likely to come out first with a new methodology in this regard.”


#5. Who shall get free banking services’?

The GST department has told that customers having a minimum balance in their bank accounts can get some free services without GST charge, that have adeemed value. Besides, GST will be calculated on the basis of the charges paid by only those customers who do not have a minimum account balance.


If you need any help regarding GST registration, feel free to contact our business advisor at 8881-069-069.

Now you can also Download E-Startup Mobile App and Never miss the latest updates relating to your business. 


Posted By Shailendra M Katkar
Posted Date 2018-12-19 15:19:29

I have a information in free banking Gst registered

Give a Reply

Fill up the form

E-startupIndia Mobile App


Download our free Android App and get realtime update on your order status.
Easily connect with our professionals handling your order over chat & mobile.
Never miss business compliances due date with advance notifications.

Get E-startupIndia in your mobile

Why Choose Us

e-startupindia member of GOOGLE

Serving business owners with an Average 4.8+ Google Rating.

e-startupindia certified #AxixBank

Trusted by Axis bank to cater its clients all licensing & compliance needs.

e-startupindia NG Alliance Partner

Providing lending solutions for business needs with NeoGrowth.

e-startupindia Google Partner

Providing business banking solutions in association with ICICI Bank.

e-startupindia member of CII

E-startupindia is a Proudly Member of Confederation of Indian Industry.The CII is a premier business association in India which works to create an environment.

e-startupindia certified #Etstartupindia

E-Startup India is duly certified under GOI's Startup India scheme and is renowned for our tech-driven solutions for business & legal services requirements for MSMEs.

e-startupindia Google Partner

E-Startup India is a Google Partner, which implies we are rigorously involved in assisting SME businesses to market their presence in the digital world.


  • e-startupindia South Asia's Leading Multimedia News Agency
  • Business Standard
  • e-startupindia Outlook
  • e-startupindia Htmedia
  • e-startupindia Yahoo News
  • e-startupindia New Delhi Times
  • e-startupindia India.com
  • e-startupindia IBTN9