Banks have challenged in court the government’s Rs 18,000 crore goods and services tax (GST), levied on them for services such as wealth management and zero-fee lockers, which circumvent the taxation process, as per a report in The Economic Times.
This is not the first time the financial institutions have tussled with the government over the issue. The government has been investigating the same since 2015.
Banks — private, public and foreign — dodged tax notices regarding service taxes and GST since April 2018, choosing to give representations at multiple forums before moving the Delhi High Court for a stay on the notices, the paper said.
Moneycontrol could not independently verify the report.
As per the government, banks through services such as deposits, lockers with no annual fees and wealth management options have dues totalling Rs 18,000 crore towards GST. The Delhi HC had directed banks to respond to the notices by August-end, it added.
As per the report, the Indian Banks’ Association has taken up the issue. While many foreign banks declined to comment, private and public banks did not respond to ET’s questions.
The government alleged that public banks circumvented the taxes due in return for maintaining the Monthly Average Balance (MAB).
For example, instead of an annual rent of Rs 20,000 for a locker, banks offered the locker in exchange of a deposit worth Rs 50,000. While the rent would give the exchequer Rs 360 as GST, deposits give the government no earnings.
Foreign and private banks meanwhile offered “premium account holders” wealth management options, free facilities, free ATM and debit card usage among other things. Bankers, however, said that practices were normal and were not undertaken to evade tax, it added.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
