GST Banking
Charges + Loan Processing 18%

BANK SERVICES GST: (1) INTEREST income (on deposits, loans): EXEMPT. (2) ACCOUNT MAINTENANCE charges: 18%. (3) ATM withdrawal fees > free limit: 18%. (4) LOAN PROCESSING fee: 18%. (5) CREDIT CARD annual fee: 18%. (6) LOCKER fee: 18%. (7) DEMAND DRAFT charges: 18%. (8) NEFT/RTGS/IMPS: EXEMPT (no GST on transfer charges from RBI's directive). (9) FOREIGN exchange margin: 18%. (10) MERCHANT POS commission: 18%.

LOAN PROCESSING FEE GST: ₹50K processing fee + 18% GST = ₹59K. (1) HOME LOAN: typically 0.5-1% of loan amount. ₹50L loan: ₹25-50K + 18% GST. (2) PERSONAL LOAN: 1-3% of loan. (3) CAR LOAN: 1% of loan. STRATEGIC: factor 18% GST in true cost calculation.

NEGOTIATE PROCESSING FEE with lender. SOME LENDERS waive for premium customers.

CREDIT CARD GST: (1) ANNUAL FEE: 18% GST. (2) MERCHANT TRANSACTION FEE (1-3%): merchant pays + passes to consumer. (3) LATE PAYMENT charges: 18% GST. (4) CASH WITHDRAWAL fee: 18%. (5) FOREIGN currency transaction fee (1.5-3.5%): 18% GST. (6) REWARDS programs: cashback often subject to GST. (7) BALANCE TRANSFER fees: 18%. STRATEGIC: high-end cards (₹10K+ annual fee) factor ₹1,800+ GST.

FOREX GST: (1) FOREIGN EXCHANGE MARGIN: 18% (typically built into rate spread). (2) TRAVEL CARD loading: 18%. (3) INWARD REMITTANCE: GST-exempt. (4) OUTWARD REMITTANCE: 18% on bank service charge. (5) FORWARD CONTRACT margins: 18%. STRATEGIC: HNW investors + frequent forex users: factor 18% in cost.

COMPARE banks (HDFC, ICICI, SBI rates differ). LRS overseas remittance: 20% TCS separately.

BANKING GST STRATEGY: (1) NEGOTIATE waivers — locker fees, annual fees, processing fees often negotiable for premium banking customers. (2) FREE ATM withdrawals — stay within bank limit (typically 3-5/month free). (3) PRIVATE BANKING tier waivers for HNW. (4) BUSINESS ACCOUNTS: claim 18% as ITC (input tax credit). (5) PERSONAL accounts: 18% pure cost. (6) FOREX CARD vs cash: factor 18% spread. (7) HOME LOAN: 18% on processing only (not interest — which is exempt). (8) INSURANCE bundled with bank: depends on the policy — see (9) and (10). (9) LIFE INSURANCE: individual policies (term, ULIP, endowment) are EXEMPT from 22 September 2025; they previously carried 18%. (10) HEALTH insurance: individual policies, including family floater and senior citizen plans, are EXEMPT from the same date. GROUP and employer-provided policies of either kind are NOT covered by the exemption and stay at 18%.

Source: Ministry of Finance / GST Council, FAQs on the decisions of the 56th GST Council (Q22 medicines, Q24 medical devices, Q56-Q57 insurance), effective 22 September 2025. CONSULT CA for business banking ITC optimization.