Pune: The upward revision of tax on financial services under the new Goods and Services Tax (GST) regime has received a negative reaction from various sections of the society. The revision of tax rate from 15 per cent to 18 per cent has drawn the ire of the public.

The increase in the tax will have a direct impact on banking transactions conducted by people as well as on any financial product that they invest in. Consumers, who paid their insurance premiums in the last four days, were shocked and unhappy with the larger sums debited from their accounts.

Speaking to Sakal Times, Chartered Accountant Rishabh Parakh said the increase in tax will definitely make financial services more expensive for consumers. “As an individual, one will end up paying three per cent more for any financial services as compared to what one paid earlier. Consumers will end up paying more for all services including financial services, banking services and consultancy services,” he said.

He stated that if a person was paying Rs 1.15 lakh annually as a premium for an insurance policy, the person will now end up paying Rs 1.18 lakh. “The loss for the individual consumers is that there are no set-offs available. There is no mechanism to offset the loss of the additional three per cent tax, unlike in businesses,” he stated.

Parakh added that all the banking services that consumers use, including locker charges, will now attract a three per cent additional tax.
Speaking on the issue, a professional employed with a private insurance company said the company has revised rates for all its policies.

“Customers who had their renewals due were advised to pay before June 30 in order to help them save. However, now on all renewals and premiums will attract the premium amount plus 18 per cent GST instead of 15 per cent service tax. We have also made a before GST and after GST rate table for the benefit of our customers,” he stated.