Page 37 - Banking Finance October 017

ARTICLE

IMPACT OF GST

ON FINANCE

SECTOR/LOAN

INDUSTRY

W ith the introduction and implementation of of banking and financial services. Post-GST, service tax is

GST, the indirect tax structure is going to
going to be in the range of 18% to 20%, instead of the ex-
change in a dramatic way, making it a
isting 15%. Therefore, services such as fund transfer, credit
single tax system. This is going to replace
loans will be marginally costlier, particularly for retail cus-
the existing central and state taxes levied card payments, ATM transactions, and processing fees on
by the respective governments. It will cover everything in- tomers.
cluding manufacturing, sale or consumption of goods and
services. This one tax system is expected to reduce the The impact of the compliance issues will be felt only after
chances of tax evasion and making the system transparent. the complete implementation of GST. Though the banking
Procedural compliance and paperwork will also reduce to a sector has recommended that GST should not cover finan-
great extent. cial and banking services, it will be clear only after the imple-
mentation. The wide geographical reach of the banks will
Impact of GST on Financial Sector also be impacted with GST. When they have multiple
branches in the same state, they will have to obtain state-
Naturally, GST will have a significant impact on the working
of the industries including financial services. The first con- wise registration. Since banks have presence in multiple
cern that the experts have is that it may increase the cost states, it will create compliance issues and obtain central-
ized registration under service tax. This is going to make the
process of filing returns as a service tax assessee extremely
About the author complicated.

CA Amit Mittal There will be other issues involving compliance when the
Founder and Chief Consultant Officer
eSilverbucks Consultants Pvt. Ltd. banks will have to decide the place of consumption where
the GST will be required to be paid. Determining the place

36 | 2017 | OCTOBER | BANKING FINANCE

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