Impact Of Goods And Service Tax (Gst) On The Banking Sector

Abstract

Goods and Service Tax (GST) is becoming a game changer for the Indian economy. GST is a comprehensive indirect tax levied on manufacture, sale and consumption of goods as well as services at State and National level. The main objective of GST is to consolidate all indirect taxes in to a single tax. Introduction of GST in India would rationalize the tax content in product price; enhance the ability of business entities to compete globally. The Goods and Service Tax was launched in India on the midnight of 30^thJune 2017 by forming the legislation which took 17 years i.e. from the year 2000 to 2017. There were many criticisms like introduction of GST would increase the cost of goods of daily use and it will affect the people adversely, especially the middle and the lower income class. GST is applicable in almost all the industries like Technology, Consumer Durable Goods, Entertainment, Chemical, Pharmaceuticals, Construction, Agriculture, and Banking Industry and so on.         This paper is an attempt to study on the impact of GST on Banking Industry. In India, Banking Sector is one of the largest service sectors. It plays a major role in the economic development of our nation. Introduction of GST is very challenging for this sector due to the higher rates of tax on several services as compared to the pre-GST service tax rate mechanism. Transaction fees on services such as Credit Card Payments, Fund Transfer, ATM transactions, Processing fees on Loans etc. is raised to 18% in the GST regime and also other challenges like state wise registration requirement, place of supply of goods and services, taxability of interest reversal of input tax credit on capital goods so on. This paper tries to give a glance on the challenges and the problems faced by the banking sector, and the benefits/gains it would reap after the introduction of GST in India.