Banks May Withdraw Some Of The Free Banking Services

After revenue department's yet again clamp down on banks who are not ready to forego the Rs. 40,000 crore in lieu of service tax against free services. There was not reached any conclusion on the matter, in the last meeting between the Department of Revenue (DoR) and the Department of Financial Services (DFS) of the Ministry of Finance in June this year.

And now, as per a leading news daily, the matter has reached the office of PMO and the matter will be discussed with banking industry officials and finance ministry. A notice sent in April by the revenue department has asked banks to clear service tax payments, penalties as well as interest in respect of free services being provided to customers.

The department has in overall asked for 12% service tax since 2018, interest on the amount and penalty equivalent to 100%.

So, after the decision on the matter is taken and banks are forced to make a payment amounting to as much as Rs. 40,000, some of the banking services shall no longer remain free for bank customers and include cheque leaves, ATM withdrawals, cash deposits, monthly account, locker visits and even Prime Minister Narendra Modi's pet Jan Dhan Yojana for financial exclusion.

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