Free banking services not liable to GST, mutual fund exit load to attract levy

NEW DELHI: Free services like ATM withdrawals, provided by banks to customers will not attract GST, but late payment charges on outstanding credit card bills and purchase of insurance policies by NRIs will attract the levy.
In a set of FAQs on applicability of Goods and Services Tax (GST) on banking, insurance and stock brokers sectors, the revenue department has clarified that transactions relating to securitisation, derivatives, future and forward contracts are exempt.
The clarification by the department keeping free banking services like cheque book issuance and ATM withdrawals outside the ambit of GST has put to rest the confusion prevailing over the issue.
Clarifying whether, services supplied without consideration to a recipient other than ‘related party’ / ‘distinct person’ taxable, the FAQ said Section 7 of the CGST Act, 2017 provides that services supplied without consideration to related persons or distinct persons only would qualify as ‘supply’.
“Therefore, where the services are supplied by a supplier without consideration to an unrelated recipient or a person other than a related or distinct person, the same would not amount to supply and not liable to GST,” it said. (AGENCIES)