Banks are approached to finance ministry to ensure that the GST (goods and service tax) doesn’t apply to levy of penal interest imposed on the customer in case of a default and delay in repayment and also the non-compliance of loan condition, the source told.
So the government to set up a special dispute resolution mechanism through IBA (Indian banks association). They start strict timelines for the completion of the appeal process lawsuit between the tax department and the banks.
IBA has argued, many banks are following strong disputes, so most disputes relating to banks involve a huge amount of money.
They are not treated on a par with less important ones. IBA also informed that, DFS (department of financial service) that while a June 2019 central GST circular has amply clarified that such additional interest won’t attract GST authorities are still issuing notices to banks in this regards. It has government urged to provide necessary explanatory notes so that banks are not subject to such notices in future.
Similarly, banks or defaulters are liable to pay the GST on the sale of repossessed assets. Defaulters are specially registered under the GST framework. Bank’s body raised some suggestions that the government raises the number of deductions in respect of provision for bad and doubtful debts made by rural branches from the current 10% of average advance.
A lot of activities given that banks and resorts that focused on the promotion of digital marketing and implement various government schemes to boost financial inclusion. The suggestion of IBA that the quarterly issuance of TDS certificate should be scrapped now.
It to be issued only annually to cut the bank’s compliance burden. a raft of suggestions submitted by the IBA with the DFS ahead of the budget for 2022-23. The relief from GST notices through the special dispute mechanism highly influenced in the banking sectors.
GST challenges that, separate registration for each state where they operate, place of supply could be critical in determining, assessment and adjudication made rigid, actionable claims, the interstate transaction between the same banks at two branches is taxable, etc. So the GST relief can reduce the above-mentioned issues.