13 hours ago
Govt starts taxing all bank transactions
At high tax rates, profit margins for sellers decrease, leaving them with options to pass on the burden to consumers, compromise on the quality of products, evade taxes or find cheaper illicit goods. photo: file
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The federal government has started collecting taxes on all types of bank transactions for both filers and non-filers from July 1. The government has increased the tax rate for non-filers on cash withdrawals from banks, while filers are also subject to withholding tax for withdrawals exceeding Rs50,000 per day.
According to the new tax regime, filers will be charged 0.3% tax on withdrawals exceeding Rs50,000 per day, while non-filers will be charged 0.6%. Furthermore, banks have increased their charges, including ATM card fees, SMS alert fees, and fees for using other banks' ATMs. These additional charges have led to disputes between bank customers and staff, with many expressing frustration over the increased costs.
As the banks revised their schedule of charges effective July 1, customers are facing double the burden in respect to increased costs. The ATM usage fee for other banks' customers has been revised from Rs18 to Rs34 per transaction. Additionally, the ATM card fee has been increased by Rs700, and the SMS alert service fee has been hiked from Rs1,200 to Rs2,000, a rise of Rs800.
Non-filers will also face a deduction of Rs522 for cash withdrawals of Rs20,000 or more through a cheque. Furthermore, banks have set daily withdrawal limits for ATM users, with standard debit card holders able to withdraw up to Rs25,000 to Rs50,000 per day, premium card holders up to Rs500,000 per day, and foreign debit card holders the equivalent of $200 to $500 per day. The tax deduction will be automatic for transactions exceeding Rs50,000 per day.
In addition to the existing charges, banks will now deduct fees for international ATM transactions based on either the exchange rate or a fixed fee set by the bank.
The disputes have prompted banks to approach 1Link for revising the schedule of charges. Banks claim that these changes will impact banking transactions and promote a cash economy. The increased charges and tax rates have sparked frustration among bank customers, leading to a rise in conflicts with bank staff.
