Providing clarification on Banking, Insurance and Stock Brokers sectors the Government announced that
- Free Banking Services like ATM withdrawals, will not attract GST
- Late Payment charges on outstanding credit card bills and purchase of insurance policies by NRIs will attract GST.
- Supply is defined as the Services rendered or serviced without consideration to related persons or district persons which would attract GST.
However it is felt that though this clarification has been issued, this may not apply for the application of Service Tax on maintenance of minimum balance in bank accounts.
- Further transactions relating to securitisation, derivatives, future and forward contracts are exempted from GST.
- On the insurance side, levy of GST it was added that on policies purchased by Non Resident Indians (NRIs), the amounts paid from an NRE accounts are paid in India Rupees and are not received in convertible currencies. Therefore the conditions of export services as provided under section 2(6)of GST Act 2017 are not satisfied. These would be treated as interstate supplies and GST levied.
- Exit load in the form of a fee whether or not as a fixed percentage of investment is liable to GST. Even Exit load received in the form of Units will be subject to GST since the consideration received here would be presumed to have been received to later convert them into NAV.
- Finance Lease is said to be a method of borrowing against the asset. The interest represents the time value of the money expended by the bank in financing the asset.
- The real weakness is said to be the utter failure in the area of performance on exports. The only means of promoting exports would be to come out of the practice of extending fiscal subsidies. Niti Aayog is said to be looking into four or five sectors in a very detailed manner and give suggestions.
- Proper risk assessment and risk management by Private Sector and Public Sector Banks is another area where more stress is expected to be given.
- Another suggestion provided is reduce the number of banks, thereby narrowing down the spread across and make available better talents across the banks in a better healthy manner.
- Possibility of macroeconomic stability of India being affected is foreseen, with an increase in the global oil prices, which was very low for the last four years, thus bringing a relief to the economy. Better way of Macro Economic management is suggested.
- Price increase has also increased the tax revenue of states, who should cut the taxes as they already get advalorem taxes. Higher oil prices results in higher inflationary trend and finding the fiscal space and reducing the excise duties should be in the mind of the Central Government.
- If one rupee is cut in the oil prices it would result in a total revenue loss of around 13,000 crores to the Government in a year. If there is scope to increase the non-tax revenues, reduction in oil prices could be made possible.