In other important clarifications, CBIC has noted that ATM
machines do not trigger a GST
registration liability —they are not a place of business. Beside, derivatives, forward and futures contracts are not subject to GST, it said. Only service charges or brokerage would be.
The move on free services by banks is in contradiction to notices issued by Directorate General of Goods and Services Tax
Intelligence offices to at least 20 private, multinational and public sector banks, to explain why they should not pay service tax, penalty and interest on ‘free services’ offered to customers between July 2012 and June 2017, a period prior to rollout of GST.
Banks mandate maintainence of a minimum balance in deposits and, in turn, offer free services such as cash withdrawal from ATMs, cheque books, account statements, internet banking, debit cards, and PIN change.
CBIC officials had earlier justified the notices arguing that banks were not offering ‘free services’ but actually charging customers by asking them to maintain a minimum account balance and penalising them if it was otherwise.
The notices might now go to a common adjudicating authority, as all banks are affected in the same way. The department of financial services
had opposed the move to tax banks for providing these ‘free services’ to customers.
At the time of GST implementation last year, United Bank, Karur Vyas Bank and Sumitomo Mitsui Banking Corporation had sought clarity from the then Central Board of Excise and Customs on the levy that might apply on services provided free of cost to customers.
ATM machines do not require GST registration
Services provided by banks to RBI are liable to GST
Derivatives, futures and forward contracts are not subject to GST
Additional interest charged for default in payment of instalment in respect of any supply, which is subject to GST, is liable to GST
Life insurance policies issued to NRIs where premium is received from non-resident external bank account taxable