Banks, financial institutions and other credit card providers have begun alerting their customers about the impending change to the increased tax rate for credit card services post GST.
Presently, 15% service tax is charged on financial services however, under GST regime, the tax rate has been hiked to 18%.
State Bank of India (SBI) has sent out a missive to its customer, “Important: The Government of India proposes to implement the GST which is likely to be effective from July 1, 2017. Consequently, the existing service tax rate of 15% shall be replaced by a GST rate of 18%.” Other major banks such as HDFC and Standard Chartered are also sending messages to their customers informing them about the impending tax rate change.
Furthermore, insurance premiums would also get costlier as they come under the purview of financial services as well. ICICI Prudential Life have sent out emails to their clients informing them that the premiums payable on term policy and fund management charges on a Unit Linked Insurance Policy will attract levy of 18% GST post July 1.