The Directorate General of Goods and Services Tax Intelligence had issued notices atleast to 20 Private, Multinational and Public Sector Banks, to offer explanation as to why Service Tax, Penalty and interest should not be collected from them for the free services like Cash Withdrawal, Four Cheque books in an year, Issue of Free Statement of Account etc., offered by them to the customers.

Now it is interpreted that banks are not offering free services to the customers, and the services mentioned above are being offered by banks on the interest on the minimum balance maintained by the customers in their accounts.  This means the banks offer a chargeable service, which ofcourse comes under the purview of GST, a note adds.

Various opinions from different corners read as under:

  • The notice sent to various entities, under older regime, as mentioned above would now be withdrawn since this does not amount to concealment of facts as was contended earlier.
  • The Department of Financial Services has opposed to the move to tax banks for providing these free services. DGGSTI was in the process of issuing similar notices to other banks and FIs, which was stopped by DFS.
  • Some comment that it is difficult to put a value to the services which are offered free, to customers and taxing would not arise.
  • Non maintenance of minimum balances are being penalised by banks and they do not relate to any services offered, as per some section. Hence, the need to pay GST should be done under close evaluation, it adds.

Since all banks are equally affected, the cases would be clubbed and referred to a common adjudicating authority.


A consultative approach of all the stake holders is required in such cases, where there appears that there is a divergent view points between industry and tax authorities.

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