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  Free banking services offered to customers not under GST ambit The ambiguity arose after notices were sent to lenders for non-payment of service tax under the pre-GST regime In relief for the banking sector, the government cleared the ambiguity over goods and services tax (GST) on ‘free services’ offered to customers. The Centre said these will not attract GST. The ambiguity arose after notices were sent to lenders for non-payment of service tax under the pre-GST regime. That issue is yet to be sorted, though the government has given enough signals that these notices might be withdrawn. In 32 pages of ‘Frequently Asked Questions’ (FAQs) for the financial services sector, issued on Sunday, the Central Board of Indirect Taxes and Customs (CBIC) clarified there would be no levy on services provided without consideration (free) to other than related/distinct persons. Government answered 91 in FAQs In other important clarifications, CBIC has noted that ATM machines do not ...

SEBI Lens on FPIs Under NRI ‘Control’ Eye on 2019 Polls: Custodians of FPIs told to identify such offshore funds The Securities and Exchange Board of India has asked custodians of foreign portfolio investors (FPIs) to identify offshore funds that are ‘controlled’ by nonresident Indians. Sebi, acting on the government’s instructions, has made it clear through fresh restrictions on investments and in subsequent meetings over the past few weeks that it’s not in favour of NRIs using FPI vehicles to trade on Indian stock exchanges. This is primarily due to a growing suspicion that resident Indians have been using NRI friends and relatives to bring back and legitimise undisclosed funds parked abroad through fund structures that are registered as FPIs with the capital markets regulator. It is widely perceived that New Delhi is trying to minimise the inflow of money through round-tripping in the run-up to the 2019 elections. “Many custodians were told last week to share data. It is...

Tax Axe Still Looms for Banks on Free Services Despite FAQs mentioning GST exemption, banks will have to slug it out before adjudicating authority. India’s banks, faced with having to pay thousands of crores in taxes on services provided in lieu of customers maintaining a minimum balance in their accounts, will have to slug it out before the adjudicating authority with the tax department. ET had reported earlier that State Bank of India, HDFC Bank, ICICI Bank, Axis Bank and others have been sent notices by Directorate General of Goods and Services Tax Intelligence (DGGSTI). “Show-cause notices have been issued so due process of law will have to follow,” a senior government official aware of the matter told ET. This comes even as the government has clarified that free services to unrelated parties will not attract goods and services tax (GST) through detailed frequently asked questions (FAQs) for the financial services industry. The indirect tax authorities are convinced abo...

 Int'l Passengers Need Not Pay GST at Duty-free Shops International passengers buying goods at airport ‘dutyfree’ shops will not be subject to GST and the revenue department will soon clarify on this exemption, an official said. Following an order passed in March by the New Delhi bench of the Authority for Advance Ruling (AAR) stating that GST would be leviable on sale of goods from 'duty-free' shops at airports, the revenue department had received a number of representations seeking clarification on the issue. The revenue department will clarify that duty-free shops will have to only collect a copy of the passport from the passenger to whom it sells the goods and later on seek GST refund from the government, the official added. Experts said that the AAR order had put such shops in a fix, since they were exempt from central sales tax and value added tax in the earlier indirect tax regime. In that mechanism, sale from such shops were considered as exports and supplies we...

 F PI Outflow Hits 18-month High at Rs 29,714 cr in May Foreign investors pulled out a massiveRs 29,714 crore from the capital markets in May, making it the biggest outflow in 18 months, primarily due to a surge in global crude prices. This comes following an outflow of Rs 15,561 crore from the capital markets (equity and debt) in April. Prior to that, foreign investors had pumped in ?2,662 crore in March. Foreign portfolio investors (FPIs) withdrew a net sum of Rs 10,060 cr from equities and Rs 19,654 cr from debt market in May, taking the total to Rs 29,714 cr. This is the steepest outflow from the capital market since Nov 2016, when FPIs had pulled out Rs 39,396 crore. The Economic Times, New Delhi, 04th June 2018

Govt Clarifies GST Applicability on Financial Services Goods and services tax applies to exit loads charged by mutual funds, additional interest charged for default in payment of loan instalments and late payment charges levied by credit card companies, the government has said. Securitisation, future contracts, derivatives and forward contracts in commodities, unless entailing actual delivery of commodities, will however not be liable to this tax which was introduced on July 1 last year. The detailed clarifications for the financial services sector issued in the form of frequently asked questions (FAQs) seeks to address some pertinent issues relating to the industry such as levy of tax on free services. The FAQs issued late Saturday night cover banking, insurance and capital markets. For banks, automated tellers machines or ATMs will not constitute place of business and will not trigger GST registration, the government said. In case services are provided by multiple branches to...