43-Ansh Shah

RESEARCH TOPIC
THE IMPACT OF GOODS & SERVICE TAX ON INDIAN BANKING

SECTOR
A project submitted to
University of Mumbai for partial completion of the degree of
Bachelor in commerce (Banking and insurance)
Semester VI
By
ANSH MAHEEPAL SHAH
(ROLL NO: 43)
Under the guidance of

MISS. SHILPA N. SABLE
SK SOMAIYA DEGREE COLLEGE OF ARTS, SCIENCE AND

COMMERCE
VIDYAVIHAR, MUMBAI-400077
MARCH, 2022
THE IMPACT OF GOODS & SERVICE TAX ON INDIAN BANKING
SECTOR
A project submitted to
University of Mumbai for partial completion of the degree of
Bachelor in commerce (Banking and insurance)
Semester VI
By
ANSH MAHEEPAL SHAH
(ROLL NO: 43)
Under the guidance of

SK SOMAIYA DEGREE COLLEGE OF ARTS, SCIENCE AND

COMMERCE
VIDYAVIHAR, MUMBAI-400077
MARCH, 2022
DECLARATION
I the undersigned MR. ANSH MAHEEPAL SHAH here by, declare that the
work embodied in this project work titled “THE IMPACT OF GOODS &
SERVICE TAX ON INDIAN BANKING SECTOR”, forms my own
contribution to the research work carried out under the guidance of MISS.
SHILPA N. SABLE is a result of my own research work and has not been
previously submitted to any other University for any other Degree/ Diploma
to this or any other University.
Wherever reference has been made to previous works of others, it has been
clearly indicated as such and included in the bibliography.
I, here by further declare that all information of this document has been
obtained and presented in accordance with academic rules and ethical
conduct.
____________________ ______________________________
College Seal (Name and signature of student)
ANSH MAHEEPAL SHAH
Certified by:
_______________________
(Internal Guide)
S K Somaiya College of Arts, Science and Commerce
Vidyavihar, Mumbai 400077
CERTIFICATE
This is to certify that Mr. Ansh Maheepal Shah has worked and dully
completed his project work for the degree of bachelor in commerce (Banking
and Insurance) under the faculty of commerce and his project is entitled as,
“The Impact of Goods & Service Tax on Indian Banking Sector” Under
my supervision.
I further certify that the entire work has been done by the learner under my
guidance and that no part of it has been submitted previously for any degree
or diploma of any university. It is his own work and facts reported by his
personal findings and investigations.
_________________ _______________________
Miss. Shilpa N. Sable Dr. Manali Londhe
(Internal Guide) (I/C Principal)
_____________________________ ___________________________
Name & Sign of External Examiner Prof. Arun Kumar Dubey
(Course Coordinator)
Date of submission:
ACKNOWLEGEMENT
To list who all have helped me is difficult because they are so numerous and
the depth is so enormous.
I would like to acknowledge the following as being idealistic channels and
fresh dimensions in the completion of this project.
I take this opportunity to thank the university of Mumbai for giving me chance
to do this project.
I would like to thank my principal, DR. MANALI LONDHE for providing
the necessary facilities required for completion of this project.
I take this opportunity to thank our coordinator PROF. ARUN KUMAR
DUBEY, for his moral support and guidance.
I would also like to express my sincere gratitude towards my project guide,
MISS. SHILPA N. SABLE whose guidance and care made the project
successful.
I would like to thank my college library, for having provided various reference
books and magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly
helped me in the completion of the project especially my parents who
supported me throughout my project.
ANSH MAHEEPAL SHAH
ROLL NO- 43
TABLE OF CONTENTS
CHAPTER NO. TOPIC PAGE
NO.
Executive summary 1
1 Introduction 3
1. Introduction to banking Sector 4
2. History of Banking in India 9
3. Introduction to Goods and service Tax 13
4. GST: Todays Banking 18
5. Implementation of Goods and Service Tax on 20

Banking Sector
6. Challenges faced by banks in GST 22
implementation
7. ABCD analysis on GST in Bank Sector 28
8. Exceptions in Goods and service Tax 32
9. Impact on customers of the banks 33

2 Research methodology 34
1. Introduction 35
2. Objective of the study 35
3. Scope of the study 35

4. Research Design 36
5. Data sources 36
6. Limitation of the study 37

3 Literature review 38
4 Data Analysis and Interpretation 45

5 Findings, Conclusion and Suggestions 61
Bibliography 66
Annexure 69
EXECUTIVE SUMMARY
1
EXECUTIVE SUMMARY
The banking sector is one of the biggest and revenue generating sector in our economy.
India is a country with impressively splendid banks with sufficient capital and well-
regulated rules and regulations. One of the biggest transformations that the sector faced
during this period is GST i.e., Goods and Service Tax, a new tax regime introduced in the
midnight of 1 July 2017. Now the new tax regime has become one year old and there are
so many changes which happened in the banking sector during this one-year periods.
Introduction of GST to the banking sector was one the highly risky and challenging role
for the government. GST is a replacement to the Value Added Tax (VAT) which was
implied on goods and services. The main purpose of studying the impact of implementation
of GST is to avoid double taxation on goods and services. It is a self-regulated tax system
with a simplifies tax regime which reduces the multiplicity of tax. The purpose of this study
is to know the challenges faced by the Banking sector and its effects on the customers after
the implementation of the GST. New tax regime made an incredible step by the abolish of
centralized registration of the banks. Now all the bank branches have to register under GST
in each state for the smooth functioning. The tax rate has created an impression in the
banking sector that the sector is contributing much toward the economic growth of the
country. Tax slabs is another important and critical thing discussed in this paper which has
substantially increased compared to the old tax regime. Using the ABCD qualitative
analysis technique, advantages, benefits, constraints, and disadvantages for both banks and
the customers for payment of GST are identified.
Data for the study have been collected from both primary data and secondary data. Primary
data has been collected directly from respondents with the help of structured
questionnaires. Secondary data sources such as journals, internet, and news articles.
2
CHAPTER 1
INTRODUCTION
3
CHAPTER 1: INTRODUCTION
1.1 INTRODUCTION TO BANKING SECTOR
Banking Means "Accepting Deposits for the purpose of lending or Investment of deposits
of money from the public, repayable on demand or otherwise and withdraw by cheque,
draft or otherwise."
-Banking Companies (Regulation) Act,1949
The banking sector is the lifeline of any modern economy. It is one of the important
financial pillars of the financial sector, which plays a vital role in the functioning of an
economy. It is very important for economic development of a country that its financing
requirements of trade, industry and agriculture are met with higher degree of commitment
and responsibility. Thus, the development of a country is integrally linked with the
development of banking. In a modern economy, banks are to be considered not as dealers
in money but as the leaders of development. They play an important role in the mobilization
of deposits and disbursement of credit to various sectors of the economy. The banking
system reflects the economic health of the country. The strength of an economy depends
on the strength and efficiency of the financial system, which in turn depends on a sound
and solvent banking system. A sound banking system efficiently mobilized savings in
productive sectors and a solvent banking system ensures that the bank is capable of meeting
its obligation to the depositors.
In India, banks are playing a crucial role in socio-economic progress of the country after
independence. The banking sector is dominant in India as it accounts for more than half
the assets of the financial sector. Indian banks have been going through a fascinating phase
through rapid changes brought about by financial sector reforms, which are being
implemented in a phased manner.
4
The current process of transformation should be viewed as an opportunity to convert Indian
banking into a sound, strong and vibrant system capable of playing its role efficiently and
effectively on their own without imposing any burden on government. After the
liberalization of the Indian economy, the Government has announced a number of reform
measures on the basis of the recommendation of the Narasimhan Committee to make the
banking sector economically viable and competitively strong. The current global crisis that
hit every country raised various issue regarding efficiency and solvency of banking system
in front of policy makers. Now, crisis has been almost over, Government of India (GOI)
and Reserve Bank of India (RBI) are trying to draw some lessons. RBI is making necessary
changes in his policy to ensure price stability in the economy. The main objective of these
changes is to increase the efficiency of banking system as a whole as well as of individual
institutions. So, it is necessary to measure the efficiency of Indian Banks so that corrective
steps can be taken to improve the health of banking system.
1.1.1 FACTS ABOUT INDIAN BANKS
1. The Indian banking system consists of 12 public sector banks, 22 private sector banks,
46 foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000
rural cooperative banks in addition to cooperative credit institutions As of September
2021, the total number of ATMs in India reached 213,145.
2. As of FY21, total credit extended surged to US$ 1,487.60 billion. According to the
RBI, bank credit stood at Rs. 110.46 trillion (US$ 1.47 trillion) and credit to non-food
industries stood at Rs. 109.82 trillion (US$ 1.46 trillion) as of September 24, 2021.
3. In FY21, total assets in the public and private banking sectors were US$ 1,602.65
billion and US$ 878.56 billion, respectively. During FY16-FY21, bank credit increased
at a CAGR of 0.29%. As of FY21, total credit extended surged to US$ 1,487.60 billion.
5
4. Demand has grown for both corporate & retail loans; particularly the services, real
estate, consumer durables & agriculture allied sectors have led the growth in credit.
5. The digital payments revolution will trigger massive changes in the way credit is
disbursed in India. Debit cards have radically replaced credit cards as the preferred
payment mode in India after demonetization. In September 2021, Unified Payments
Interface (UPI) recorded 3.65 billion transactions worth Rs. 6.54 trillion (US$ 87.11
billion).
6. India is the world's largest market for Android-based mobile lending apps, accounting
for ~82% of all online lenders worldwide. India currently has 887 active lending apps.
7. As of October 10, 2021, the number of bank accounts—opened under the government’s
flagship financial inclusion drive ‘Pradhan Mantri Jan Dhan Yojana (PMJDY)’—
reached 43.57 crore and deposits in the Jan Dhan bank accounts totalled >Rs. 1.45
trillion (US$ 19.46 billion).
8. Indian banks are increasingly focusing on adopting integrated approach to risk

management. The NPAs (Non-Performing Assets) of commercial banks has recorded
a recovery of Rs. 400,000 crore (US$ 57.23 billion) in FY19, which is highest in the
last four years.
9. RBI has decided to set up Public Credit Registry (PCR), an extensive database of credit
information, accessible to all stakeholders. The Insolvency and Bankruptcy Code
(Amendment) Ordinance, 2017 Bill has been passed and is expected to strengthen the
banking sector. Total equity funding of microfinance sector grew 42% y-o-y to Rs.
14,206 crore (US$ 2.03 billion) in 2018-19.
6
Figure 1: Showing Indian banks Market Size, Sector Comparison, Key Tends,
Government Initiatives, Advantages towards India.
7
In the above figure there's an enormous increase in deposits from the past years. As per the
RBI, banking sector of India is effectively capitalized and well-regulated. The economic
and monetary conditions within the nation are way advanced to the other countries in the
world. Market, credit, and liquidity risk studies advise that banks in India are usually
versatile and have powerfully faced the world economic crises. Indian banking system has
lately witnessed the roll-out of innovative banking models, implementation of GST and
also the new tax rates that contributes a lot of revenue to the arena.
The impact of GST to the banking sector had created an impact that GST is doing a
wonderful job within the sector because of high rates compared to previous tax rates
(service tax) however it's become an expensive affair for customers. Most of the staff
within the sector agrees that GST may be a sensible initiative taken by the govt for
sustainable banking however there's a high range of the matter arising concerning the new
legal system and feels that GST to the banking sector is verified to be a cumbersome or
sophisticated thanks to a great number of transactions. The banks weren't allowed for a
centralized registration underneath GST. They’re needed to try and do separate registration
in every state they operate in.
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1.2 HISTORY OF BANKING IN INDIA
Banking in India has its origin as early or Vedic period. It is believed that the transitions
from many lending to banking must have occurred even before Manu, the great Hindu
furriest, who has devoted a section of his work to deposit and advances and laid down rules
relating to the rate of interest. During the mogul period, the indigenous banker played a
very important role in lending money and financing foreign trade and commerce.
During the days of the East India Company, it was the turn of agency house to carry on the
banking business. The General Bank of India was the first joint stock bank to be established
in the year 1786. The other which followed was the Bank of Hindustan and Bengal Bank.
The Bank of Hindustan is reported to have continued till 1906. While other two failed in
the meantime. In the first half of the 19th century the East India Company established their
banks, The bank of Bengal in 1809, the Bank of Bombay in 1840 and the Bank of Bombay
in1843. These three banks also known as the Presidency banks were the independent units
and functioned well. These three banks were amalgamated in 1920 and new bank, the
Imperial Bank of India was established on 27th January, 1921.
With the passing of the State Bank of India Act in 1955 the undertaking of the Imperial
Bank of India was taken over by the newly constituted SBI. The Reserve Bank of India
(RBI) which is the Central bank was established in April, 1935 by passing Reserve bank
of India act 1935. The Central office of RBI is in Mumbai and it controls all the other banks
in the country.
In the wake of Swadeshi Movement, number of banks with the Indian management were
established in the country namely, Punjab National Bank Ltd., Bank of India Ltd., Bank of
Baroda Ltd., Canara Bank. Ltd. on 19th July 1969, 14 major banks of the country were
nationalized and on 15th April 1980, 6 more commercial private sector banks were taken
over by the government.
9
The first bank in India, though conservative, was established in 1786. From 1786 till today,
the journey of Indian Banking System can be segregated into three distinct phases. They
areas mentioned below:
 Early phase from 1786 to 1969 of Indian Banks

 Nationalization of Indian Banks and up to 1991 prior to Indian banking sector
Reforms.
 New phase of Indian Banking System with the advent of Indian Financial &
Banking Sector Reforms after 1991.
Phase I
The General Bank of India was set up in the year 1786. Next came Bank of Hindustan and
Bengal Bank. The East India Company established Bank of Bengal (1809), Bank of
Bombay (1840) and Bank of Madras (1843) as independent units and called it Presidency
Banks.
These three banks were amalgamated in 1920 and Imperial Bank of India was established
which started as private shareholders banks, mostly European’s shareholders.
In 1865 Allahabad Bank was established and first time exclusively by Indians, Punjab
National Bank Ltd. was set up in 1894 with headquarters at Lahore. Between 1906 and
1913, Bank of India, Central Bank of India, Bank of Baroda, Canara Bank, Indian Bank,
and Bank of Mysore were set up. Reserve Bank of India came in 1935.
During the first phase the growth was very slow and banks also experienced periodic
failures between 1913 and 1948. There were approximately 1100 banks, mostly small. To
streamline the functioning and activities of commercial banks, the Government of India
came up with The Banking Companies Act, 1949 which was later changed to Banking
Regulation Act 1949 as per amending Act of 1965 (Act No. 23 of 1965). Reserve Bank of
India was vested with extensive powers for the supervision of banking in India as the
Central Banking Authority.
10
During those day’s public has lesser confidence in the banks. As an aftermath deposit
mobilization was slow. Abreast of it the savings bank facility provided by the Postal
department was comparatively safer. Moreover, funds were largely given to traders.
Phase II
Government took major steps in this Indian Banking Sector Reform after independence.
In1955, it nationalized Imperial Bank of India with extensive banking facilities on a large
scale especially in rural and semi-urban areas. It formed State Bank of India to act as the
principal agent of RBI and to handle banking transactions of the Union and State
Governments all over the country.
Seven banks forming subsidiary of State Bank of India was nationalized in 1960 on 19th
July,1969, major process of nationalization was carried out. It was the effort of the then
Prime Minister of India, Mrs. Indira Gandhi. 14 major commercial banks in the country
were nationalized.
Second phase of nationalization Indian Banking Sector Reform was carried out in 1980
with seven more banks. This step brought 80% of the banking segment in India under
Government ownership.
The following are the steps taken by the Government of India to Regulate Banking
Institutions in the Country: 1949: Enactment of Banking Regulation Act.
 1955: Nationalization of State Bank of India.

 1959: Nationalization of SBI subsidiaries.
 1961: Insurance cover extended to deposits.
 1969: Nationalization of 14 major banks.
 1971: Creation of credit guarantee corporation.
 1975: Creation of regional rural banks.
 1980: Nationalization of seven banks with deposits over 200 crores.
11
After the nationalization of banks, the branches of the public sector bank India rose to
approximately 800% in deposits and advances took a huge jump by 11,000%.
Banking in the sunshine of Government ownership gave the public implicit faith and
immense confidence about the sustainability of these institutions.
Phase III
This phase has introduced many more products and facilities in the banking sector in its
reforms measure. In 1991, under the chairmanship of M Narasimhan, a committee was set
up by his name which worked for the liberalization of banking practices. The country is
flooded with foreign banks and their ATM stations. Efforts are being put to give a
satisfactory service to customers. Phone banking and net banking is introduced. The entire
system became more convenient and swift. Time is given more importance than money.
The financial system of India has shown a great deal of resilience. It is sheltered from any
crisis triggered by any external macroeconomics shock as other East Asian Countries
suffered. This is all due to a flexible exchange rate regime, the foreign reserves are high,
the capital account is not yet fully convertible, and banks and their customers have limited
foreign exchange exposure.
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1.3 INTRODUTION TO GOODS AND SERVICE TAX
GST is the most ambitious and remarkable indirect tax reform in India’s post-Independence
history. Its objective is to levy a single national uniform tax across India on all goods and
services. GST has replaced a number of Central and State taxes, made India more of a
national integrated market, and brought more producers into the tax net. By improving
efficiency, it can add substantially to growth as well as government finances. Implementing
a new tax, encompassing both goods and services, by the Centre and the States in a large
and complex federal system, is perhaps unprecedented in modern global tax history.
GST is a tax on goods and services with comprehensive and continuous chain of set-off
benefits up to the retailer level. It is essentially a tax only on value addition at each stage,
and a supplier at each stage is permitted to set-off, through a tax credit mechanism, the
GST paid on the purchase of goods and services. Ultimately, the burden of GST is borne
by the end-user (i.e., final consumer) of the commodity/service.
With the introduction of GST, a continuous chain of set-off from the original producer’s
point and service provider’s point up to the retailer’s level has been established, eliminating
the burden of all cascading or pyramiding effects of an indirect tax system. This is the
essence of GST. GST taxes only the final consumer. Hence the cascading of taxes (tax-on-
tax) is avoided and production costs are cut down.
As already noted, prior to the introduction of GST, the indirect tax system of India suffered
from various limitations. There was a burden of tax-on-tax in the pre-GST system of
Central excise duty and the sales tax system of the States. GST has taken under its wings a
profusion of indirect taxes of the Centre and the States. It has integrated taxes on goods
and services for set-off relief. Further, it has also captured certain value additions in the
distributive trade. There is now a continuous chain of set-offs which would eliminate the
burden of all cascading effects.
13
Presently, services sector in India constitutes a tax base with vast potential which has not
been exploited as yet. It is in this context that GST is justified as it has subsumed under it
almost all the services for the purpose of taxation. Since major Central and State indirect
taxes have got subsumed under GST, the multiplicity of taxes has been substantially
reduced which, in turn, would decrease the operating costs of the country’s tax system. The
uniformity in tax rates and procedures across the country will go a long way in reducing
compliance costs.
In a nutshell, GST is a comprehensive indirect tax levy on manufacture, sale and

consumption of goods as well as services at the national level. GST is an indirect tax for
the whole of India to make it one unified common market. GST is designed to give India a
world class tax system and improve tax collections. It would end the long-standing
distortions of differential treatment of manufacturing sector and services sector. GST will
facilitate seamless credit across the entire supply chain and across all States under a
common tax base.
1.3.1 Evolution of GST in India
In 2000, the Vajpayee Government started discussion on GST by setting up an Empowered

Committee, headed by Asim Dasgupta (West Bengal Finance Minister) to design the GST
model. Thereafter, the Task Force on Implementation of the Fiscal Responsibility and
Budget Management Act, 2003 (Chairman: Vijay Kelkar) recommended the removal of all
inefficient and distortionary taxes so that India obtains the efficiencies of a single national
tax, and suggested a comprehensive GST based on VAT principle. The idea of moving
towards a GST was proposed in 2005 by the then Union Finance Minister, P. Chidambaram
in his budget speech for the year 2005-06 where he observed that the entire production-
distribution chain should be covered by a goods and services tax that encompasses both the
Centre and the States. He reiterated his idea in 2006-07 budget speech and proposed April
1, 2010 as the date for introducing GST. Towards this objective, an Empowered Committee
(EC) of State Finance Ministers was to work with the Central Government to prepare a
14
roadmap for introduction of GST. The final version of the report of EC was presented in
the form of ‘A Model and Roadmap for Goods and Services Tax in India’ on April 30,
2008.
After receiving comments on the report from Government of India and concerned officials
of the State Governments and taking into account their recommendations, the EC released
the First Discussion paper on Goods and Services Tax in India on November 10, 2009 to
obtain the inputs of industry, trade bodies, and people at large. On 22nd March 2011, the
Constitution (115th Amendment) Bill was introduced in the Lok Sabha to operationalize
the GST and enable Centre and States to make laws for levying of GST. However, the Bill
lapsed with the dissolution of the 15th Lok Sabha. Thereafter, on 19th December, 2014 the
Constitution (122nd Amendment) Bill, 2014 was introduced in the Lok Sabha to address
various issues related to GST. It is noteworthy that the introduction of GST required a
Constitutional amendment as the Constitution did not vest express power either in the
Central Government or State Government to levy tax on the ‘supply of goods and services.
While the Centre was empowered to tax services and goods up to the production stage, the
States had the power to tax sale of goods. Since the GST regime requires goods and services
to be simultaneously taxed by both the Central and State Governments, a Constitutional
amendment was needed.
The Constitution (122nd Amendment) Bill, 2014 was passed by the Lok Sabha on 6th May,
2015 after which the Rajya Sabha passed the Bill with 9 amendments on 3rd August, 2016.
The Lok Sabha then passed the modified Bill on 8th August, 2016. After getting approval
of half of the States, it was sent to the President for his assent which was given on 8th
September, 2016. Thus, the road to GST rollout was cleared and the process of enactment
was completed.
15
Figure 2: Journey of GST so Far
1.3.2 Some of the advantages of GST are: -
1. Reduction of cascading of taxes: There was a large number of taxes like services tax,
customs duty, value added tax etc. imposed on goods and services traded in our
economy. After the introduction of GST, there the cascading or overlapping of taxes in
different sectors of the products from production to consumption has reduced. The tax
for the good and services is paid equally to the state and the central government. in
simple words, it is multiple taxes to a single integrated tax.
2. An overall reduction in price: The prices of the goods are expected to reduce in the
future due to the uniform tax imposed on different goods and services. the tax on each
good and services are assigned or levied according to the different category in which
the goods lie.
16
3. Self-regulated tax: GST facilitates the customers or the taxpayers to have an easy
compliance and make their payment effortless. GST has introduced the concept of
"Auto Notified", "Mismatch Mechanism" in order to find out any mismatches in the
tax filing mechanism. The mismatch can happen from the side of the recipient and in
such cases, the recipient himself can make a correction or the supplier can make
mistakes like he /she didn't upload or pay tax on the invoice which he/she was issued.
In these two cases, the recipient or supplier of the goods can do corrections in the tax
filing.
4. non-Intrusive electronic tax system: GST has been introduced as a non-intrusive tax
system as it is bordered tax system and decreases the black money transaction and the
free flow of goods and services.
5. Simplified tax regime: The tax system is more simplified, there is no cascading effect
as each level of the transaction the tax has been set off.
6. Uniformity of tax system: There is uniform tax rates for various products in the
market as the tax charged on various products are 0%, 5%, 12%, 18%, and 28%
depending on the value and of the category of the product.
Figure 3: Types of GST (Goods & Service Tax)

1.The CGST is collected by the Centre as levied on Intra-State transactions
of Goods and services.
2.Under this, the goods and services are taxed according to their basic market
price. The CGST replaced all central taxes like State Tax, CST, SAD.
1.The SGST is collected by the State govt. The state may claim revenue on all the
transactions of goods and services that take place within that state.
2.The SGST replaced all State taxes like Sales Tax, Entertainment Tax, VAT, Entry
Tax.
1.Under IGST, the integrated tax of all goods and service transactions that
take place inter-state, is collected by the Centre.
2.It is also levied on imported Goods for distribution and movement of
services from State to State.
1. The UTGST, applicable in Lakshadweep, Daman and Diu, Dadra and Nagar Haveli,
Andaman and Nicobar Islands, and Chandigarh are collected by the Centre.
2.It is imposed on supply or transactions of goods and services, intra-UT.
17
1.4 GST: TODAY'S BANKING
Banking sector is one of the oldest sectors which contributes a huge amount of wealth to
the country. Now the earning of the sector has been increasing day by day. The banking
system in India is divided into different sectors as shown in table 1.
Table 1: The number of banks in India as on September,2021.

Banks Numbers of Banks
Public Sector Banks 12
Private Sectors Banks 22
Foreign Banks 46
Regional Rural Banks 56
Urban Cooperative Banks 1485
Rural Cooperative Banks 96000
1.4.1 BANK WHICH ARE AUTHORISED IN CENTRE AND STATES FOR GST
PAYMENT
As per Section 2(14) of the CGST Act, “authorized bank” shall mean a bank or a branch
of a bank authorized by the Government to collect the tax or any other amount payable
under the Act.
At present 24 Banks (after merger of five Associate Banks with SBI) are authorized for
collection of Indirect taxes. As per the GST Payment process Report, only those banks
should be authorized to accept GST receipts who meet the minimum requirements given
in PARA 85 of the Report. On the basis of these minimum requirements, a Bank
Authorization Reference Model (BARM) was prepared by the Office of Pr.CCA CBEC
Department of Revenue containing the requirements in details. As per these requirements,
the existing authorized Banks are required to establish their IT integrations with GSTN and
RBI and to follow the pre-defined protocols to ensure better service delivery to Tax payer
and efficiency in remittance of funds to Central/State Government Account with RBI.
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 Out of the 13 parameters, seven critical parameters were identified namely
i. Protocol to ensure CIN is generated only when money is actually credited in
Government Account maintained in Banks e-FPB.
ii. The bank has a system of consolidated debit of the tax payer account and
corresponding multiple credits in the 39 Government wise accounts.
iii. Approach adopted by the Bank for handling single debit and multiple credit.
iv. The Centralized application for the OTC payments has been put in place as required
in BARM.
v. System for validations of challans data in OTC Payments.
vi. Integration with GSTN for receipts and acknowledgement and
vii. Bank-RBI Integration Completion Certificate obtained from RBI and enclosed
On the basis of these seven critical parameters the proposals of all 24 Banks have been
assessed and found to be completed and accordingly it is proposed to authorize these 24
Banks for the collection of all collections of Goods and Service Tax in the entire country.
The names of these 24 banks are shown in table 2.
Table 2: It shows the name of banks which are registered under GST for any payment at
central and state level.
NAME OF BANKS
Allahabad bank Andhra Bank Axis Bank
Bank of Baroda Bank of India Bank of Maharashtra
Canara Bank Central Bank of India Corporation bank
Dena Bank HDFC Bank ICICI Bank
IDBI Bank Indian Bank Indian Overseas Bank
Oriental Bank of Punjab and Sind Bank Punjab National Bank

Commerce
State Bank of India Syndicate Bank UCO Bank
Union Bank of India United Bank of India Vijaya Bank
19
The proposal from J&K Bank has not been received as it has been recently authorized for
Govt. business by RBI. However, the integration of J&K bank with RBI and GSTN is under
process along with the development of GST specific IT application. Therefore, it is also
proposed to authorize J&K Bank on provisional basis subject to final assessment and
approval by the Pr.CCA CBEC as has been done for other Banks. A committee has been
constituted by Revenue Secretary to look into the Bank wise preparedness in detail to
ensure that no inconvenience is caused to Tax payer and there is a synergy between GSTN,
Accounting authorities, RBI and Banks.
1.5 IMPLICATIONS OF GOODS AND SERVICE TAX ON BANKING

SECTOR
The GST model law and its framework did not allow a lot of benefits to banks. It did not
understand the consideration to the type of transactions that take place continuously and
on a wider scale. The various impacts as well as challenges that are related to the provisions
of the Model GST Law have been enunciated further here.
1.5.1 BEFORE AND AFTER COMPARISON OF BANKING SERVICES
 BEFORE GST IMPLEMENTATION
 No Service Tax was levied on income earned through Interest Income.
 Commission income gained/earned was liable for Service tax only.
 Brokerage Income gained/earned was liable for Service tax.
 Agency Services gained/earned by banks was liable for Service tax.
 Portfolio Management Service was liable for Service tax.
 Credit as well as Debit charges were liable for Service tax.
 Income earned by way of penalties; retention charges were also liable for payment
of Service tax.
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 Inter sale or purchase of Foreign Currency amongst bank or authorized dealers of
foreign exchange was not liable for Service tax.
 Services by the Reserve Bank were not liable for Service tax.
 Under CENVAT credit rules of India, banks have the option that they can pay for
every month such an amount that is equal to 50 per cent of CENVAT credit gained
for input and input services in that particular month. The CENVAT credit can be
availed if there are no reversal conditions.
 AFTER GST IMPLEMENTATION
 Before implementation of GST 15 per cent Service tax rate was followed, after
GST implementation it increased to 18 per cent tax rate.
 Centralized registration is not possible under GST regime. Banks need to register
separately if they open branch for every state (section 22 of CGST Act). They can
have only one registration for multiple branches in one state.
 An annual return and three times a monthly return is to be furnished by the bank.
 As per definition of Service provided by section 2(102), Service means anything

that is other than goods. By interpreting it in that way, interest earned by banks is
liable to be taxed in GST. Further according to Schedule III, which describes
activities or transactions should not be treated as supply of goods and services. So,
no exemption is provided to any banking services. The Indian GST law should
make clear whether the ambit of GST includes or excludes the interest on GST.
 Inter sale as well as Purchase of Foreign currency by banks or authorized dealers

of foreign exchange are liable to be taxed in GST since no exemption is provided.
 Services by RBI are liable to be taxed in GST since no exemption is provided to

them also. As GST is considered a supply tax regime, so for every kind of
transaction, banks should determine the place of consumption and payment of
GST.
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 GST increases the cost of capital as under GST 50 per cent of CENVAT is charged
which is then reversed, reducing credit of about 50 percent.
1.6 CHALLENGES FACED BY BANKS IN GST IMPLEMENTATION
1. PROCEDURE OF REGISTRATION
Before the advent of GST all the banks in India have a centralized registration under the
Service tax law for all the branches in the country. The government has ruled out
centralized registration for financial institutions called banks under the new tax regime
goods and services tax and, it has mandated separate registration for each state they operate
in. It has become a compulsory activity for all the bank which work within the country in
order to carry out its functions. It created a huge compliance burden on the banks. It
requires high harmonization and control between the banks within and outside the state for
tax matters. Under GST administration, accounting and financial records etc. are to be
maintained separately for each state-wise. the banks doing state-wise registration, filing
multiple returns for each state, multiple audit and assessments especially in a situation
where banks have branches in almost every state and union territory of the county and with
each state, each city, each locality has a branch of the bank.
 STEP IN THE REGISTRATION PROCESS:

a. The customer has to Log on to Goods and Service Tax site.
b. The customer has to get on the ‘Services’ tab on the list of options at the top of the
page.
c. Three options will be provided, viz. ‘Registration’, ‘Payments, and ‘User Services’.
d. Got to the ‘Registration’ and select ‘New Registration’.
e. It will be redirected to a fresh page in which the customer will have to select the option
which differentiates whether he is a taxpayer or a GST practitioner prior to entering a
few information such as the legal name of the business, the state and district in which
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the company is located, Permanent Account Number, email address and mobile
number. This is fundamentally Part-A of the form.
f. The information of the customer has to be entered will have to be confirmed and
verified by the portal, so the customer will receive a one-time password or an email for
authentication.
g. Based on the type of business the customer is operating, he will be compulsory to
upload a few documents as requested.
h. Part-B of the form will then have to be filled in with a small number of details after
which the customer will obtain the Application Reference Number through email or
SMS.
i. The customers application will then be verified or checked by a GST officer and it
could either be accepted or you will be requested to present some more information or
documents until the authorities have all the required information to accept your
application.
For each state separate registration has to be done, if a bank or trader has branches in
numerous states. Businesses with more than 1 vertical can register individually for each
of them. Banks have to register each and every branch in which they operate in. Any
transactions or business activities are conducted only when the bank or the company is
registered under GST.
2. INTER- STATE TRANSACTION BETWEEN TWO BRANCHES OF THE

SAME BANK
Before the implication of GST, the transaction between 2 branches of the same bank wasn't
subject to any tax. however, under GST tax regime interstate supply of products and
services or each between the same bank's 2 branches situated in two states are taxable that
is thought as integrated goods and service tax (IGST). Generally, banks have lots of
common and shared services being supported by Head workplace. Like security package,
center etc. Further, again and again one branch would internally give service to alternative
branches for example: resolution the problem of a client having PAN Republic of India
accounts, providing native info etc. to alternative branches etc. GST is to be charged on
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such provides, while the identical is created inconsiderately, it might cause pointless
hardship. however, resolution is provided within the valuation rules that just in case of a
dealing with distinct persons, value disclosed on the invoice shall be deemed to be taken
as Associate in Nursing open market price, but still valuation problems could creep as this
rule doesn't apply if the receiving branch isn't ready to avail the complete credit because of
any reason whatever. Since, in a banking sector pursuit such transactions would prove to
be a cumbersome task and cause multiple interpretations and disputes, so one suggestion
is that by the virtue of Rule 6(7) of GST Valuation Rules, banking services be categorized
in such category of services wherever price for any transactions undertaken between the
distinct persons is deemed to be thought of as zero.
3. PLACE OF SUPPLY BANKING SERVICES

The place of supply of services under GST Law for banking and other financial services
shall be the location of the recipient of services on the records of the supplier of services.
Provided that if the place of the recipient of services is not on the records of the supplier,
the place of supply shall be the place of the supplier of services. However, what constitutes
the ‘records of the supplier’ is not defined in the law leading to multiple interpretations as
to whether it is to be understood as accounting records or customer records, vendor records
and so on. Further, in some cases banks would have multiple addresses of the same
customer in its records, this is possible as in case of a banking sector a customer would add
multiple accounts within the same customer id and in which case only one address of the
customer under whose address that customer id is registered would be reflected as the
address on records. However, it is possible that the transaction is undertaken with the
account holder within the same customer id but having a branch in the different state. In
such a situation, if strictly banks pay GST to the state based on the “address on record”
then it may end up paying GST in a wrong state. Therefore, banks have to record the
address of each account holders within the same customer id and GST needs to be charged
on that account holder and accordingly, the tax also must be paid to that respective state
government of the account holder and not the single address captured for the entire
customer id.
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4. REVERSAL OF INPUT TAX CREDIT ON CAPITAL GOODS
Before the implication of GST, as per Rule 6(3B) of CENVAT Credit Rules, 2004, an
assessee in the banking sector has to reverse 50% of the CENVAT Credit taken on a
monthly basis on input and input services. However, banks can take full credit on Capital
goods unless they said capital goods are exclusively used for any exempted service. Now
under section 14 of the GST law states that banks engaged in supplying goods and services
by way of accepting deposits, extending loans have to reverse 50% of the eligible input tax
credit on inputs, capital goods, and input services. It is pertinent to note that requirement
of reversal of standard 50% credit even on the capital goods portion will have a negative
impact. Various office furniture, equipment, cash-counting machines, computers, printers,
air-conditioners etc. are of high procurement cost for any branch of the bank and if 50% of
the credit on the same is to be reversed then it shall have an adverse impact.
5. GST IS CHARGED ON ALL BANKING ACTIVITIES

Banks have charged GST on various products and services carried on by the banks except
for deposits, which can be classified like this:
 TRANSACTION CHARGES: Transaction charges have been increased to 18%

which was 15% earlier. The shocking news is that the ATM transactions are restricted
to a certain point i.e., first 5 withdrawals are free after 5 withdrawals Rs.20 per
withdrawal is charged in order to reduce the withdrawal of money through ATM's
which will automatically increase the usage of internet banking. Also, the usage of
cheque books will be expensive if any customer uses more than 50 cheques a year and
it is charged less than Rs.100. The individuals have to pay Rs.3 more for every Rs.100
paid for banking transactions.
 LOANS: All the loans are taxable under GST for 18% and there is no chance of tax
percentage to go beyond the tax slab of 18%. But there is a big concern about the home
loans which was availed to the borrowers for a VAT of 5% for construction materials
and 3.5% service tax, overall, of 8.5 which is now available only as per the GST rate
18% which will be little more expensive for the borrowers.
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 INVESTMENTS: Investments like mutual funds are affected negatively due to the
introduction of GST. GST bang on the income of mutual funds will certainly have an
effect on the consumers. For an investment company, an expense ratio is a cost incurred
by them to operate their mutual funds. In case of the policyholders, they have to pay
high premiums amount on their insurance assuming, a family spend a sum of Rs 50,000
per annum on insurance exclusive of service tax, their expenses will be increased by
3%, i.e., Rs 1500. Earning up to Rs 20 lakh will stay exempted from GST for mutual
fund distributors.
Figure 3: The figure represents various products and services provided by banks which
charge 18% GST replacing the 15% tax.
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 INSURANCE: GST has a severe effect on insurance as there is a rise in the premium,
especially for life, health, and car insurance policies. The tax rate has increased from
15% to 18% under GST. For example, if the complete premium is for life insurance, a
tax rate of 18% will affect the entire premium.
 INPUT TAX CREDIT: Under GST, 50% of the CENVAT credit availed against
inputs, input services, and capital goods is to reverse which leaves them a position of
reduced credit of 50% on capital goods thereby increasing the cost of capital.
 REVIEW OF BANKING TAX RATE IMPLIED ON THE PRODUCTS AND
SERVICES UNDER GST.
The table 3 shows a brief description of the products and services provided by bank and
which help us to have a quick understanding of various tax rates imposed on various
products and services.
Table 3: The various tax rates imposed on various products and services
Items Taxable Not Taxable Tax %
Deposits - NT -
Debit Card T - 18%
Credit Card T - 18%
Loan T - 18%
Forex T - 1% of gross rupee
Investments T - 18%
Banking Facilities T - 18%
Pension - NT -
Remittance (NEFT, T - 18%
RTGS)
Insurance T - 18%
ATM T - 18%
Input Credit Tax T - 18%
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1.7 ABCD ANALYSIS ON GST IN BANKING SECTOR
ABCD is an acronym that stands for Advantages, Benefits, Constraints, and

Disadvantages. ABCD framework can be used to analyze the individual characteristics,
system characteristics, effectiveness of a concept or idea, effectiveness of a strategy while
studying the business value in the society. ABCD analysis framework can be used for any
kind of company case study. ABCD analyzing framework allows their searcher to analyze
any issues related to both internal and external to its business. This analysis framework
being simple and straight forward, can be used to study many company issues or problems
to find a suitable solution through simplifying the issues/problems by identifying the
affecting factors through the factor analysis and critical constituent elements through
elemental analysis. Analyzing business models, business systems, business strategy,
business concepts and ideas, products & services of a company, future expansion plans of
a company etc. through ABCD constructs allows the readers to identify and understand the
problems from various stakeholder’s point of view so that an optimum solution can be
developed. Thus, using ABCD analysis framework in suitable depth either qualitative
listing, qualitative analysis, or quantitative analysis of identified issues is recommended in
company case study as a research methodology.
Table 4: The table shows the advantages and benefits of GST in the banking sector and its
customer.
ADVANTAGES BENEFITS
Self-regulated tax system. Easy understandable for general public.
Transparent tax system. No confusion in tax filing and tax rate.
Uniform tax rate. No tax on deposit.
Compulsory registration under GST. Increased the number of online banking.
Registration under GST will reduce the
amount of tax payable on the purchase of
goods.
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 ADVANTAGES
I. Self-regulating tax system:

GST has introduced the concept of "Auto Notified" and "Mismatch" mechanism
so it is known as a self-regulating tax system in which the mismatch shall be
automatically notified by the system to both the supplier/bank and
recipient/customer and also auto-check provisions are made to identify fraudulent
practices
II. Transparent tax system:
Consumers will get to know the actual amount of taxes they are paying for goods
and services in the form of a single GST rate that which is split between central and
state governments.
III. Uniform tax rate:
In the banking sector, GST maintains a uniform tax rate of 18% i.e., all the services
are taxed for 18% in the banking sector.
IV. Compulsory registration:
Under GST compulsory registration for the banks in each branch they operate in order to
reduce the confusion in the tax mechanism in each state and each branch for any
transaction.
 BENEFITS
I. Easy understandable for the general public:

GST is a new tax regiment involved with a large number of goods and service. it is
a simplified way of tax in order to build the people aware of how the goods and
services are taxed. The tax is charged on different commodity under different slabs
of 0%, 5%, 12% and 18% which easy for the people to remember and understand.
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II. No confusion in filing tax and tax rates:
The people who have to pay GST does not have any confusion in the tax rate as it
is a uniform tax rate. there is uniform tax rate of 0%, 5%, 12%, 18% and 28%.
III. No tax on deposits:
The bank is not charging any GST on deposits made by the customers. It is totally
exempted from GST due to that there is a huge increase in the deposits of the bank.
IV. Increased number of Online banking:
Under ATM withdrawal the first 5 withdrawals are free after 5 withdrawals Rs.20
per withdrawal is charged in order to reduce the withdrawal of money through
ATM's which will automatically increase the usage of internet banking.
V. Registration under GST:
It will make the entire tax collection easier and each branch of the bank can have
an independent tax filing system.
Table 5: The table shows the disadvantages and constrains of GST in the banking sector
and its customer.
DISADVANTAGES CONSTRAINTS
Tax has increased to 18% compared to the Banking became costlier to the customers
earlier service tax of 15%
Loans are charged for 18% without any Customers are charged 18% on home
other differentiation in the tax rate loan, before which was 8.5%.
Place of supply for banks are not specified
In banking, place of supply of service
shall be the location of the customer on
records.
Due to state- wise registration, multiple Difficult for the bank to cope up with the
audit and assessment is required changes in registration as the presence of
the bank in each locality.
Interstate transaction between branch of It is expensive and inconvenient task for
the same bank is charged. the banks that each transaction between
branches of the same banks is attracted by
IGST.
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 CONSTRAINTS
I. Banking became costlier for the customer:

One of the important constraints of the banking sector is due to the increase of the
tax rate in almost all the products and services, it became a costlier activity for the
customer as it became 18%.
II. Home Loans:
GST has affected mainly on the home loan. now all the products and services
offered by the bank is 18% which was earlier 15% except home loan which was
8.5%. There is a huge increase of 9.5% tax on home loan due to GST.
III. Place of supply:
Under GST, the place of supply of services for banking and other financial services
shall be the location of the recipient of services on the records of the supplier of
services. Provided that if the location of the recipient of services is not on the
records of the supplier, the place of supply shall be the location of the supplier of
services. the place is not specified in the GST law for banking activities which
creates a huge confusion.
IV. Registration process:
Each branch of the same bank should register separately under GST, it forces the
bank to do multiple audit and assessments.
V. Expensive and attracts IGST:
It is an expensive and inconvenient task for the banks that each transaction between
branches of the same banks are attracted to IGST. the transaction between each
branch of same banks in different states is taxed under GST. It causes inconvenient
for the banks located in different states.
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 DISADVANTAGES
I. The tax rate has increased to 18%:

The services tax which was provided in our country was 15% earlier which is now
increased to 18 %. All the products and services offered by the banks are under
18% which has made banking services more expensive.
II. Place of supply:
One of the drawbacks of GST law is that the place of supply is not specified for the
banking activities. the banks have to assume the customer's contact point as the
place of supply of services.
III. Home loan:
Compared to other loans home loan have higher rates than another loan, the
customer is in shock due to the huge increase in the home loan.
IV. Registration:
One bank has to register multiple times in all branches at a different state. it became
a hectic work for the bank when GST was introduced at first.
V. Interstate charges:
GST is charged IGST, CGST and SGST for the banking transaction for each state
and interstate transaction are charges IGST for every bank.
1.8 EXCEPTIONS IN GST

 As per GST Law 2017, there is no GST payable on Services received by the Reserve
Bank of India from outside India in relation to the management of foreign exchange
reserves. So, the rate of GST payable on Services received by the RBI from outside
India in relation to the management of foreign exchange reserves is nil rates.
 In the banking sector services by the way of extending loans or advances, deposits in
so far as the consideration is represented by way of interest or discount (other than the
interest in credit card services).
32
 Services by the way of Inter sale or inter purchase of foreign currency among banks or
authorized dealers of foreign exchange or between banks and such dealers.
 Services provided by a bank which is going to be acquired, to any individual in relation

to the settlement of any amount of money up to two thousand rupees in a solitary
transaction transacted through credit card, debit card or charge card or other payment
card service.
1.9 IMPACT ON CUSTOMERS OF THE BANKS
Due to GST implementation, the tax rates on all types of products & services of bank have
become expensive and less affordable for the customers. As shown in table 3, various tax
rates on various items are explained.
1. Debit card and a Credit card is one of the common instruments used by the customers
nowadays, the tax charged on these instruments is 18% which is costlier than the
previous rate which was 15%.
2. Loans were available at a cheaper rate before the advent of GST, now the rate has been
fixed to 18% which made the customers in pressure and uncertainty that whether the
customer will be able to repay the amount.
3. Investments like mutual funds are negatively affected by GST. the customers are in
great strain that the cost incurred by the investment’s banks are very high and the tax
charged on these investments is 18% which is very much higher for the customers to
afford and mutual funds are largely based up to the total expense ratio which has gone
up by 3% after the initiation of GST.
4. Banking facilities like locker facilities, tax payment, billing, and shopping etc. are
widely used by the customer. It was charged at a rate of 15% and now it has changed
to 18%. Even though it is expensive customers with large assets always maintain a
locker system for their safety purpose.
5. Increase in the premium caused a large number of the customer to withdraw the
insurance policy. people with low income cannot afford the premium charged under
GST.
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CHAPTER 2
RESEARCH METHODOLOGY
34
CHAPTER 2: RESEARCH METHODOLOGY
2.1. INTRODUCTION
Research methodology is methodology for collecting all sorts of information and data
interpreting to the subject in questions. The objective is to examine all the issue involved
and conduct situational analysis. The methodology includes the overall research design,
sampling producer and field work done and the finally analysis producer. The methodology
used in the study consistent of sample survey using both primary and secondary data.
The primary data collected from questionnaire as well as personal observation books,
magazines, journals have been referred for secondary data. The questionnaire has been
drafted and presented by researcher himself.
2.2. OBJECTIVE OF THE STUDY

 To know the issues faced by the banking sector after the implementation of GST.
 To understand the challenges of the bank and the customers to fulfil the norms.
 To identify tax rate imposed on services provided by the bank.
 To study the benefits and difficulties those are linked to banking sector after
implementation of GST.
2.3 . SCOPE OF THE STUDY

 To examine the impact of Goods and Service Tax on banking sector.
 To examine the challenges faced by banking sector after Goods and Service tax
implementation.
 To examine the issues faced by bank customers.
 To study the tax rates imposed on banking services.
35
2.4 . RESEARCH DESIGN
The research study is exploratory and descriptive in nature. The establish objectives
were kept in mind during the study, however no hypothesis was formed as the study
was more in the form of descriptive design attempting to analyze the attitude of
respondents towards the project which is new in the region can be considered at a
finding level as far as the awareness among the respondents in concerned.
2.5. DATA SOURCES
 SAMPLE SIZE: -
Sample size of 89 people was taken into study, and their data was collected .
 SAMPLING TECHNIQUE: -
To study the project, Simple Random Sampling is used.
 DATA COLLECTION: -
The data, which is collected for the purpose of study, is divided into 2 bases:
Primary sources:
The data has been collected directly from respondents with the help of structured
questionnaires.
Secondary sources:
The data has been collected through journals, articles on the topics, magazines,
books, internet, and previous research paper which focused on the GST impact on
banking.
 DATA INTERPRETATION: -
Interpretation of data is done by using statistical tools like pie diagrams, bar graphs
and quantitative techniques (by using this techniques) accurate information is
obtained.
36
 CLASSIFICATION & TABULATION OF DATA: -
The data thus collected were classified according to the categories, counting shits
and the summary tables were prepared. The resultant tables were one dimensional
and 2 dimensional.
 STATISTICAL TOOLS USED FOR ANALYSIS: -

Out of the total respondents, the people who responded logically were taken into
account while going into statistical details and analysis of data. The tools that have
been used for analyzing data and inference drawing are mainly statistical tools like
percentage, ranking, averages, etc.
As per questionnaire and market survey I have find out different responses from
different people. According to their responses I analyzed the findings and draw
certain remarks.
2.6. LIMITATION OF THE STUDY
 Sometimes respondents did not respond well to all the questions in the
questionnaire.
 Low cooperation from the people make to struggle more.
 Some biasness might have occurred in analysis. Because lack of expertise
knowledge.
 Best efforts were made to incorporate all important variables in study, yet chances
of some of the variable not appearing in the study are not ruled out.
 Frequent developments in this sector can be major reason of limitation in the study.
 Biasness in view of respondent can’t be ruled out.
 Resistance to change sometimes affect view of respondents.
37
CHAPTER 3
LITERATURE REVIEW
38
CHAPTER 3: LITERATURE REVIEW
Sunil Dhawan (2017)

In this article author describes about transaction charges in financial services are likely to
increase as the government has put under the 18% tax bracket in the GST law. These
services were so far taxed at 15% and the hike in the tax rate means that individuals will
have to pay Rs 3 more for every Rs 100 paid as charges for banking transactions.
G. Meena (2018)
This study reveals that how changes that have to be made on banking sector after
implementation of goods and services tax and certain issues, difficulties, and benefits to
banking industry also explained.
B. Savithri (2018)
According to this article author focus about how transaction fees of financial services will
affect before implementation of GST and after implementation of GST and how the service
charges of banks increased or hiked from 15% to 18% with the example of ATM.
Santosh H Raghavendra (2016)

This study describes Services offered by banks are taxed at 14.5% currently which under
GST regime are likely to become costlier at standard rate of 17-18%. Several activities of
banks are currently exempt from service tax (Ex: Fund based activities like interest payable
on deposits / savings bank accounts and loans disbursed) which would incur GST unless
otherwise exclusively exempted. Several services provided to weaker sections of society
could get taxed if not exempted making the services costlier.
39
Chaurasia et al. (2018)
He studied, “Role of Goods and Services Tax in the growth of Indian economy” and
concluded that in overall GST will be helpful for the development of Indian economy and
this will also help in improving the Gross Domestic Products of the country more than two
percent.
Revathi R (2018)
According to this article author said about challenge’s faced by the banking sector and its
effects on the customer after the implementation of the Goods and services tax, also
describes the tax slabs which has substantially increased compared to old tax regime. the
author also using ABCD qualitative analysis technique to know the advantages, benefits,
constraints and disadvantages for both the customers and banking sector.
Pavankumar G Kulkarni (2018)

This article describes various disputes that banking sector may look due to introduction of
GST And its implications so as to improve the rules, where ever required to be address, the
negative effect of GST on the banking sector and issues related to revenue identification
like account linked financial services, non-account linked financial services also discussed
etc.
Pandey M. (2017)
This study state that goods and services tax or GST impacted many fields but it has
influenced mainly banking sector. Banking sector had to go through several issues because
of the initiative taken. It proved to be useful but it had negatives as well that couldn’t be
ignored. The major problem banking sector had to face was substantial increase in
compliance. Banks were required to obtain the registration on the basis of state-wise. One
registration was necessitated for all the branches located in the state which created many
hassles for banking sector. Because of state-wise registration it was important for every
bank to fulfil the requirements of compliance levels. Thus, this paper has provided the
appropriate comprehension of the impact of GST on Indian banking sector.
40
Nayyar and Singh (2018)
According to this article, Goods and service tax impacted the banking sector in a positive
manner as well as there are certain advantages as well that have been provided to the
bankers. Some of them includes that the bank becomes capable of settling off their
liabilities associated with the goods and service tax against the credit that is associated with
the receiving on goods purchasing. Secondly, banks have become partially qualified for
taking partial credit of excise duty and service tax that is paid on the goods that are
qualifying and procured and also for the services which are used for the provision linked
to service that is output.
Bhasin (2017)
In the research he stated, Taxability of interest is another impact that banking sector had to
face because of the goods and service tax. In the present regime of tax, the legislation of
service tax doesn’t tax interest. But through the use of term of GST service is depicted in
a huge manner for covering anything other than that of goods. Authorities across the globe
don’t levy GST on the fact, there is always a discussion on that the interest and on the
lending money consideration. The goods and service tax in the country is required to clarify
the interest if GST is from outside If interest is not attracting any goods and services tax
then implications on input tax credits can be claimed by the banks easily.
Dahal (2010)
Research conducted by him, examined that, managing the tax credits and utilization or
unutilized is already very complex for the banking sector. But, now because of the goods
and service tax all the banks are required to maintain and manage it in an efficient manner.
Basically, what banks are required to do is that they must ensure about maintaining the
separate accounts for having the control over input associated with the tax credit including
the credit that is utilized or unutilized Goods and service tax has come up with so many
complexities for the banking sectors as most of the legal implications are implied to them.
41
Thirumal Azhagan and A. Kanmani (2019)
This study states that the cost of financial transaction will be slightly higher for the end
customer. Banks will have higher compliance cost due to registration of branches and inter
branch services. That GST is a risky and challenging initiative taken by the government
for substantial banking and uniform tax imposed on all product and services, the issues
faced by the banking sector a highlighted in this paper in order to understand how
challenging the implementation of GST in the banking sector was. The banks have to
register in each state they operate in. all the services provided with the same tax rate of
18% except deposits which is exempted from tax and services like ATM withdrawals, input
tax credit, cheque, loans, investments have negative impact after implementing GST which
made all these services very expensive to the customer, but it generates a large amount to
the Indian banking sector.
Pukhraj Paul, Vikram Sandhu & Heena Atwal (2019)

This article describes issues related to revenue recognition after GST implementation on
Account & Non-account linked financial services. The digitized and centralized scenario
prevailing in India identifying the state of location of service recipient will be quite
difficult. In cases where the service recipients like professionals, manufacturers, traders
and other workers often shift from one place to other in search of better opportunities, the
service provider may have different address namely permanent address, current address,
the address of communication and KYC address.
Akansha Khurana and Aastha Sharma (2018)

In this research paper on GST- A positive reform for Indirect taxation system concluded
that the GST will provide relief to producers and consumers by providing wide and
comprehensive coverage of input tax credit set-off, service tax set off and subsuming the
several taxes.
42
Yadav and Shankar (2018)
They stated that, as per the GST law, it is important that the supply services places for
banking and other financial services or BOFS should be the service recipient location on
the records of the service supplier. In any case, if the location is not on the supplier records,
the supply place should be the service supplier location. So, banks might have different
accounting records or customer records or vendor record and it has become their
accountability to manage single customer ids for different account which proves to be
hectic for the bankers.
Syed Mohd Ali Taqvi, Srivastava and Srivastava (2011)

In this research article they have included the illustration of goods and services tax or GST
on Indian banking sector in an efficient manner. They discussed that transactions among
the branches were not subjected to any sort of tax though it is required in the regime of tax.
Commonly, banks have similar services that are shared which are supported from the head
office like call centre or software security and so on. As GST system has been launched so
banks are necessitated to deliver solution to customer in any branch for instance, each
branch will have to resolve the issue of PAN Indian account for customer and also are
accountable for delivering local information. There are so many problems which have to
be faced by the banking sector because of GST program.
Purohit M. and Purohit V. (2010)

This study state that, the impact of goods and service tax on the bank sector is proved to be
positive for them as the bank doesn’t get tax credit that is input of state VAT paid on any
goods that are procured by them. Banks have become capable of taking credit of goods and
service tax on the goods procured. Secondly, input tax credit can be used by the bank for
the purpose of making any sort of supply that is outward. Goods and service tax proved to
be helpful in reducing the evasion of tax. The business increase will be helpful in increasing
the transactions number in the bank because of the additional demand of funds.
43
Pinki et al. (2014)
This study state that, “Goods and Service tax-panacea for indirect Tax System in India”
and concluded that the new NDA government in India is positive towards implementation
of GST and it is beneficial for central government, state government and as well as for
consumers in long run if its implementation is backed by strong IT infrastructure.
Kumar (2014)
He studied, “Goods and Service Tax - A way forwards” and concluded that after
implementation of GST in India many indirect tax systems will be finished and there will
be only one tax i.e., GST which is expected to encourage unbiased tax structure.
Anupama R (2017)
This study state that, GST services are anticipated to be attracting around 18% interests.
The rate is bigger by 3 % from the present tax rate of 15%. This led to making the services
of bank little complex such as issuing of the cheque books and demanding of drafts have
also become little expensive, particularly for the customers who are retailers. Also, it is
important to note that nowadays banks are also dealing in commodities like gold or silver
where GST rate that is concessional is anticipated to be applicable. Thus, banks are required
to be cautious while paying the goods and service tax with the adequate applicability rate
on altered products.
44
CHATPTER 4
DATA ANALYSIS AND INTERPRETATION
45
CHAPTER 4: DATA ANALYSIS AND INTERPRETATION
Question 1. In which Bank sector do you have Bank Account?
OPTIONS PERCENTAGE NUMBER OF

RESPONSES
Private sector 35% 31
Public sector 52% 46
Both 13% 12
Responses
13%
35% 52%
Public Sector Banks Private Sector Banks Both
Interpretation:
 The following data provides details about the Bank sector in which the respondents
have their bank account.
 The above table and pie chart demonstrate that the total number of respondents are
89 and out of 89 responses, 31 responses (35%) are having bank account in private
sector and 46 responses (52%) are having bank account in public sector and 12
responses (13%) are having bank account in both sectors.
46
Question 2. Which Type of bank account do you hold?
OPTIONS NUMBER OF RESPONSES

Saving account 45
Current account 11
Fixed deposit account 17
Recurring deposit account 13
Demat account 3
Responses
50 45
45
40
35
30
25
20 17
15 13
11
10
5 3
0
Saving a/c Current a/c Fixed deposit Recurring Demat a/c
a/c deposit a/c
Interpretation:
 The following data provides details about which type of bank account the
respondents are holding.
 The above table and vertical bar chart demonstrate that the total number of
respondents are 89.
47
 Out of 89 responses, 45 respondents are having saving bank account, 11
respondents are having current account, 17 respondents have fixed deposit account,
13 respondents have recurring deposit account and 3 respondents are having demat
account in banks.
Question 3. Are you aware of GST (Goods & Services Tax)

implementation on banks?

RESPONSES
Yes 91% 81
No 8% 7
Maybe 1% 1
Responses
8%
1%
91%
Yes No May be
Interpretation:
 The following data provides detail about the awareness of Goods and Service Tax
implementation on Banking Sector.
48
89.
 91% of respondents are having knowledge about impact of Goods and Service Tax
on banking sector.
 8% of respondents are not having knowledge about impact of Goods and Service
Tax on banking sector.
 1% of respondents says that maybe they are having knowledge about impact Goods
and Service Tax on banking sector.
Question 4. Does your bank is registered under Goods and Service Tax?

RESPONSES
Yes 84% 75
No 4% 3
Maybe 12% 11
Responses
12%
4%
84%
Yes No Maybe
49
Interpretation:
 The following data provides detail regarding whether the respondent’s bank is
registered under Goods and Service Tax.
89.
 84% of respondents says that their bank is registered under Goods and Service Tax.
 4% of respondents says that their bank is not registered under Goods and Service
Tax.
 12% of respondents says that maybe their bank is registered under Goods and
Service Tax.
Question 5. On which banking services you have to pay GST?

RESPONSES
ATM 22% 20
Debit / Credit Cards 24% 21
Loans 4% 4
Insurance policy 16% 14
Fund transfer (NEFTS, 34% 30
RTGS, IMPS)
Interpretation:
 The following data provides detail on banking services on which the Goods and
Service Tax is payable.
89.
50
 22% of respondents says that they pay Goods and Service Tax on ATM.
 24% of respondents says that they pay Goods and Service Tax on Debit/Credit
Cards.
 4% of respondents says that they pay Goods and Service Tax on Loans.
 16% of respondents says that they pay Goods and Service Tax on Banking facilities.
 34% of respondents says that they pay Goods and Service Tax on fund transfers
(NEFTS, RTGS, IMPS).
Question 6. Do you agree that Goods and Service Tax on banking sector
become more expensive?

RESPONSES
Yes 64% 57
NO 20% 18
Maybe 16% 14
Responses
16%
20%
64%
Yes No Maybe
51
Interpretation:
 The following data provides detail regarding Goods and Service Tax on banking
sector is expensive or not.
 64% of respondents says that Goods and Service Tax on banking sector has
become more expensive.
 20% of respondents says that Goods and Service Tax on banking sector is not so
expensive.
 16% of respondents says that Goods and Service Tax on banking sector maybe it
is expensive.
Question 7. what do you think after GST implementation unorganized

banking sectors is been reduced?
OPTIONS NUMBER OF
RESPONSES
Strongly agree 33
Agree 21
Neutral 21
Disagree 11
Strongly disagree 3
52
Responses
40
35
30
25
20
15
10
0
Strongly agree Agree Neutral Disagree Strongly
disagree
Interpretation:
 The following data provides detail about if unorganized banking sector has been
reduced after Goods and Service Tax implementation.
 The above table and vertical bar chart demonstrate that the total number of
respondents are 89.
 Out of 89 respondents, 33 respondents strongly agree and 21 respondents agree on
that after Goods and Service Tax implementation unorganized banking sector has
been reduced.
 21 respondents says that maybe after Goods and Service Tax implementation
unorganized banking sector has been reduced.
 11 respondents disagree and 3 respondents strongly disagree on that after Goods
and Service Tax implementation unorganized banking sector has been reduced.
53
Question 8. What do you think that Goods and Service Tax on banking
sector is good reform to India?

RESPONSES
Yes 70% 62
No 20% 18
Maybe 10% 9
Responses
10%
20%
70%
Yes No Maybe
Interpretation:
 The following data provides details about if the Goods and Service Tax on banking
sector is good reform to India.
89.
 70% respondents are agreeing that Goods and Service Tax on banking sector is
good reform to India.
54
 20% respondents are disagreeing that Goods and Service Tax on banking sector is
good reform to India.
 10% respondents says maybe the Goods and Service Tax on banking sector is good
reform to India.
Question 9. Do you agree that Goods and Service Tax has increased the
burden on common man?

RESPONSES
Yes 67% 60
No 18% 16
Maybe 15% 13
Responses
15%
18%
67%
Yes No Maybe
55
Interpretation:
 The following data provides details about if Goods and Service Tax has increased
the burden on common man.
89.
 67% respondents are agreeing that Goods and Service Tax has increased the
burden on common man.
 18% respondents are disagreeing that Goods and Service Tax has increased the
burden on common man.
 15% respondents says maybe the Goods and Service Tax has increased the burden
on common man.
Question 10. What do you think that Goods and Service Tax is good
method to replace service tax?

RESPONSES
Yes 68% 61
No 13% 11
Maybe 19% 17
56
Responses
19%
12%
69%
Yes No Maybe
Interpretation:
 The following data provides details about if Goods and Service Tax is good method
to replace service tax.
89.
 69% respondents are agreeing that Goods and Service Tax is good method to
replace service tax.
 12% respondents are disagreeing that Goods and Service Tax is good method to
replace service tax.
 19% respondents says maybe that Goods and Service Tax is good method to replace
service tax.
Question 11. Do you agree that Goods and Service Tax on banking sector
has increased cost of compliance?

RESPONSES
Yes 60% 53
No 21% 19
Maybe 19% 17
57
Responses
19%
21% 60%
Yes No Maybe
Interpretation:
 The following data provides details on impact Goods and Service Tax on banking
sector has increased cost of compliance.
89.
 60% respondents are agreeing that Goods and Service Tax on banking sector has
increased cost of compliance.
 21% respondents are disagreeing that Goods and Service Tax on banking sector
has increased cost of compliance.
 19% respondents says maybe the Goods and Service Tax on banking sector has
increased cost of compliance.
Question 12. Are you willing to pay Goods and Service Tax charges on
banking services?

RESPONSES
Yes 80% 71
No 10% 9
Maybe 10% 9
58
Responses
10%
10%
80%
Yes No Maybe
Interpretation:
 The following data provides details about if the respondents is willing to pay Goods
and Service Tax on banking services or not.
89.
 80% respondents are willing to pay Goods and Service Tax on banking services.
 10% respondents are not willing to pay Goods and Service Tax on banking
services.
 10% respondents says maybe they are willing to pay Goods and Service Tax on
banking services.
59
CHAPTER 5
FINDINGS, CONCLUSION AND SUGGESTIONS
60
Chapter 5: Findings, Conclusion and Suggestions
5.1. Findings:
 The majority of respondents belonged to the age group of below 20 years which
formed 14%, followed by age group of 20-30 years which formed 61%, followed
by age group of 30-40 years which formed 17% and age of above 40 years which
formed 9%.
 From the findings, it is identified, 31 responses (35%) are having bank account in
private sector banks and 46 responses (52%) are having bank account in public
sector banks and 12 responses (13%) are having bank account in both sectors. This
shows that majority of the people are having account in public sector banks.
 From the findings, it is identified, 91% of respondents are having knowledge about
impact of Goods and Service Tax on banking sector. 8% of respondents are not
having knowledge about impact of Goods and Service Tax on banking sector.1%
of respondents says that maybe they are having knowledge about impact Goods and
Service Tax on banking sector. This indicates that, the majority of respondents are
having knowledge about impact of Goods and Service Tax on banking sector.
 From the findings, it is identified, 64% of respondents says that Goods and Service
Tax on banking sector has become more expensive. 20% of respondents says that
Goods and Service Tax on banking sector is not so expensive. 16% of respondents
says that Goods and Service Tax on banking sector maybe it is expensive. This
indicates that, after implementation of Goods and Service Tax on banking sector
it has become more expensive.
61
 From the findings, it is identified, 54 respondents agree on that after Goods and
Service Tax implementation unorganized banking sector has been reduced. 21
respondents says that maybe after Goods and Service Tax implementation
unorganized banking sector has been reduced. 14 respondents strongly disagree on
that after Goods and Service Tax implementation unorganized banking sector has
been reduced. This indicates that, after implementation of Goods and Service Tax
on banking sector unorganized banking sector has been reduced.
 From the findings, it is identified, that out of 89 responses, 45 respondents are

having saving bank account, 11 respondents are having current account, 17
respondents have fixed deposit account, 13 respondents have recurring deposit
account and 3 respondents are having demat account in banks. This shows that
majority of people are holding saving account in banks.
 From the findings, it is identified, 70% respondents are agreeing that Goods and
Service Tax on banking sector is good reform to India. 20% respondents are
disagreeing that Goods and Service Tax on banking sector is good reform to India.
10% respondents says maybe the Goods and Service Tax on banking sector is good
reform to India. This indicates that, Goods and Service Tax on banking sector is
a good reform to India.
Service Tax has increased the burden on common man. 18% respondents are
disagreeing that Goods and Service Tax has increased the burden on common
man. 15% respondents says maybe the Goods and Service Tax has increased the
burden on common man. This indicates that, Goods and Service Tax has increased
the burden of common man in India.
62
Service Tax is good method to replace service tax. 12% respondents are disagreeing
that Goods and Service Tax is good method to replace service tax. 19% respondents
says maybe that Goods and Service Tax is good method to replace service tax. This
indicates that, Goods and Service Tax is a good method to replace VAT, Service
Tax, etc.
Service Tax on banking sector has increased cost of compliance. 21% respondents
are disagreeing that Goods and Service Tax on banking sector has increased cost
of compliance. 19% respondents says maybe the Goods and Service Tax on
banking sector has increased cost of compliance. This indicates that, the person
is spending more money after Goods and Service Tax implementation on
compliances.
 From the findings, it is identified, 80% respondents are willing to pay Goods and
Service Tax on banking services. 10% respondents are not willing to pay Goods
and Service Tax on banking services. 10% respondents says maybe they are
willing to pay Goods and Service Tax on banking services. This indicates that,
majority are willing to pay Goods & Service Tax.
 From the findings, it is identified, 22% of respondents says that they pay Goods
and Service Tax on ATM. 24% of respondents says that they pay Goods and Service
Tax on Debit/Credit Cards. 4% of respondents says that they pay Goods and Service
Tax on Loans. 16% of respondents says that they pay Goods and Service Tax on
Banking facilities. 34% of respondents says that they pay Goods and Service Tax
on fund transfers (NEFTS, RTGS, IMPS). This shows that on all most on all
banking services the Goods and service Tax is charged.
63
5.2. Conclusion
The present study concludes that GST is a risky and challenging initiative taken by the
government for sustainable banking and a uniform tax is imposed on all the products and
services. The issues faced by the banking sector is highlighted in this paper in order to
understand how challenging the implementation of GST in the banking sector was. The
banks have to register in each state they operate in. All the services are provided with the
same tax rate of 18% except deposits which is exempted from tax and services like ATM
withdrawals, input tax credit, cheque, loans, investments have a negative impact after the
implementation of GST which made all these services very expensive to the customer, but
it generates a large amount to the Indian banking sector. And also, it is said that Rs.3 more
for every Rs.100 paid for banking transaction which contributes a huge amount to the
economy. The transaction between two branches of the same bank was not subject to any
tax. but under GST tax regime interstate supply of goods and services or both between the
same bank's two branches located in two states are taxable which is known as integrated
goods and service tax. Under GST Law for banking and other financial services shall be
the location of the recipient of services on the records of the supplier of services. GST law
states that banks engaged in supplying goods and services by way of accepting deposits,
extending loans must reverse 50% of the eligible input tax credit on inputs, capital goods,
and input services. The banking sector has now settled with the current tax rates and
adopted the changes and runs smoothly.
64
5.3. Suggestions:
1. The bank should provide necessary training to the employees work with the GST.
2. By considering the benefits of customer, the banking sector may withdraw tax
demand on free banking services.
3. From the above study, the most disappointing thing for the customer is an increase
in the tax rate of the home loan which was much lower compared to the current tax
regime. the products and services of the banks are charged with a uniform tax rate
of 18%. I would like to suggest that if the bank can reduce the rate of charges in
some of the services provided by them then there will be huge customer
satisfaction. they may be an increase in the banking activities.
4. The hike in the tax rate means, individuals will have to pay Rs.3 more for every
Rs.100 paid as charges/fees for banking transaction. So, the banks have to increase
the number of free limit transaction to their customer.
5. Even though it has been implemented from past 5 years, till the taxpayer and other
common people have a doubt regarding the tax rates, items charged under GST and,
how much of tax should be paid. So, in order to make a sense about what is GST to
the customer, the concerned bank should provide brochures to the customer to
understand various tax imposed on various products and services to the customer
who is holding an account in the bank.
6. All the banks in India are registered under GST at each state, each branch. The
transaction is done through the GST act. The banks have to file multiple returns
state-wise, numerous audits and assessments; particularly in a situation where
banks have the existence in about all state and union territory of the country and
there are large number banks located in each city and locality in the state. With
loads of branches, the entire harmonization and integration of each state regional
bank shall also be a challenge. Therefore, the government must bring in some
unique proposal to the banking sector so that the high administration and
compliance trouble which is placed under the GST is reduced as the business
activities of banking sector entirely differs from that of other sectors.
65
BIBLIOGRAPHY
66
Bibliography
 Jayashree R, kotnal (2016). GST in India: An enrichment of indirect taxation

system, international journal of applied research.
 R.A (2017). Critical Implication of Goods and Service Tax on the banking sector.
International conference on management and information system
 Purohit, M. and Purohit, V. (2010). Goods and Service Tax in India. The Indian
economic journal.
 Nayyar, A. and Singh, I. (2018). A comprehensive analysis of goods and service
tax in India. Indian Journal of Finance.
 Pandey, M (2017). A research paper on study and impact of Goods and Service Tax
(GST) on Indian banking sector. International journal of management, IT and social
science.
 Bhasin, N. (2017). Critical Implications of Goods and Service Tax on the Banking
Sector. International Conference on Management and Information Systems.
[online] Available at: http://www.icmis.net/icmis17/icmis17cd/pdf/S204.pdf
[Accessed 10 Feb. 2018].
 Dahal, R. (2010). Goods and Service Tax in India – Challenges and Opportunities.
SSRN Electronic Journal.
 Issues in GST on Banking Sector. (n.d.). [online] Available at: http://Issues in GST
on Banking Sector [Accessed 10 Feb. 2018].
 Syed Mohd Ali Taqvi, S., Srivastava, A. and Srivastava, R. (2011). Challenges and
Opportunities of Goods and Service Tax (GST) in India. Indian Journal of Applied
Research.
 Syed Mohd Ali Taqvi, S., Srivastava, A. and Srivastava, R. (2011). Challenges and
Opportunities of Goods and Service Tax (GST) in India. Indian Journal of Applied
Research.
 Yadav, S. and Shankar, R. (2018). Goods and service tax (GST): how and why.
Journal of Advances in Management Research.
67
 Dr. T. Arockia Sagayaraj and V. Akalya (2020). IMPACT OF GST ON INDIAN
BANKING SECTOR.
 Pukhraj Paul, Vikram Sandhu, Heena Atwal (2019). Implications of GST on Indian
Banking Sector.
 A Dash (2017). Positive and negative impact of GST on Indian economy.
 Websites:
1. www.researchgate.net
2. Scholar.google.com
3. Ideas.repec.org
4. www.wowessays.com
68
ANNEXURE
69
Annexure
Questionnaire on Impact of Goods & Service Tax on Banks
Disclaimer: The data gathered through this survey would be used exclusively for the
purpose of academic research only.
Project title: A study on “The Impact of Goods and Service Tax on Indian Banking
Sector”.
Name: _______________
Age:
 Below 20
 20-30
 30-40
 Above 40
Gender:
 Male
 Female
 Prefer not to say
Occupation:
 Student
 Business
 Professional
 Service
 House wife
70
Question 1. In which bank sector do you have bank account?
 Private sector
 Public sector
 Foreign sector
Question 2. Which type of bank account do you hold?

 Saving account
 Current account
 Fixed deposit account
 Recurring deposit account
 Demat account
Question 3. Are you aware of GST (Goods & Services Tax) implementation on banks?
 Yes
 No
 Maybe
Question 4. Does your bank is registered under Goods and Service Tax?
 Yes
 No
 Maybe
Question 5. On which banking services you have to pay Goods and Service Tax?
 ATM
 Debit/Credit Cards
 Loans
 Insurance Policy
 Fund transfer (NEFTS, RTGS, IMPS)
71
Question 6. Do you agree that Goods and Service Tax on banking sector has become
more expensive?
 Yes
 No
 Maybe
Question 7. What do you think after GST implementation unorganized banking

sectors is been reduced.?
 Strongly agree
 Agree
 Neutral
 Disagree
 Strongly disagree
Question 8. what do you think that Goods and Service Tax on banking sector is good
reform to India?
 Yes
 No
 Maybe
Question 9. Do you agree that Goods and Service Tax has increased the burden on
common man?
 Yes
 No
 Maybe
72
Question 10. What do you think that Goods and Service Tax is good method to replace
service tax?
 Yes
 No
 Maybe
Question 11. Do you agree that Goods and Service Tax on banking sector has
increased cost of compliance?
 Yes
 No
 Maybe
Question 12. Are you willing to pay GST charges on banking services?
 Yes
 No
 Maybe
73

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RESEARCH TOPIC

THE IMPACT OF GOODS & SERVICE TAX ON INDIAN BANKING

Under the guidance of

SK SOMAIYA DEGREE COLLEGE OF ARTS, SCIENCE AND

Under the guidance of

SK SOMAIYA DEGREE COLLEGE OF ARTS, SCIENCE AND

ANSH MAHEEPAL SHAH

1. Introduction to banking Sector 4

2. History of Banking in India 9

3. Introduction to Goods and service Tax 13

4. GST: Todays Banking 18

5. Implementation of Goods and Service Tax on 20

8. Exceptions in Goods and service Tax 32

9. Impact on customers of the banks 33

3. Scope of the study 35

6. Limitation of the study 37

4 Data Analysis and Interpretation 45

1.1 INTRODUCTION TO BANKING SECTOR

1.1.1 FACTS ABOUT INDIAN BANKS

8. Indian banks are increasingly focusing on adopting integrated approach to risk

 Early phase from 1786 to 1969 of Indian Banks

 1955: Nationalization of State Bank of India.

In a nutshell, GST is a comprehensive indirect tax levy on manufacture, sale and

1.3.1 Evolution of GST in India

In 2000, the Vajpayee Government started discussion on GST by setting up an Empowered

1.3.2 Some of the advantages of GST are: -

Figure 3: Types of GST (Goods & Service Tax)

Table 1: The number of banks in India as on September,2021.

Public Sector Banks 12

Private Sectors Banks 22

Regional Rural Banks 56

Urban Cooperative Banks 1485

Rural Cooperative Banks 96000

Allahabad bank Andhra Bank Axis Bank

Bank of Baroda Bank of India Bank of Maharashtra

Canara Bank Central Bank of India Corporation bank

Dena Bank HDFC Bank ICICI Bank

IDBI Bank Indian Bank Indian Overseas Bank

Oriental Bank of Punjab and Sind Bank Punjab National Bank

Union Bank of India United Bank of India Vijaya Bank

1.5 IMPLICATIONS OF GOODS AND SERVICE TAX ON BANKING

1.5.1 BEFORE AND AFTER COMPARISON OF BANKING SERVICES

 BEFORE GST IMPLEMENTATION

 No Service Tax was levied on income earned through Interest Income.

 Commission income gained/earned was liable for Service tax only.

 Brokerage Income gained/earned was liable for Service tax.

 Agency Services gained/earned by banks was liable for Service tax.

 Portfolio Management Service was liable for Service tax.

 Credit as well as Debit charges were liable for Service tax.

 AFTER GST IMPLEMENTATION

 As per definition of Service provided by section 2(102), Service means anything

 Inter sale as well as Purchase of Foreign currency by banks or authorized dealers

 Services by RBI are liable to be taxed in GST since no exemption is provided to

1.6 CHALLENGES FACED BY BANKS IN GST IMPLEMENTATION

 STEP IN THE REGISTRATION PROCESS:

2. INTER- STATE TRANSACTION BETWEEN TWO BRANCHES OF THE

3. PLACE OF SUPPLY BANKING SERVICES

5. GST IS CHARGED ON ALL BANKING ACTIVITIES

 TRANSACTION CHARGES: Transaction charges have been increased to 18%

ABCD is an acronym that stands for Advantages, Benefits, Constraints, and

I. Self-regulating tax system:

I. Easy understandable for the general public:

I. Banking became costlier for the customer:

I. The tax rate has increased to 18%: