There is no GST on withdrawal of cash from banks: FM Sitharaman

There is no GST on withdrawal of cash from banks: FM Sitharaman

The minister, during the price rise debate in the Rajya Sabha on Tuesday, clarified that no GST is levied when people withdraw cash from banks.

In an attempt to “bust the myths” around the Goods and Services Tax (GST) raised by the Opposition in the Rajya Sabha, finance minister Nirmala Sitharaman on Tuesday listed out some of the essential items on which the government levies no GST and also those whose prices decreased under the unified tax regime.

The minister, during the price rise debate that went on for five hours in the Rajya Sabha on Tuesday, clarified that no GST is levied when people withdraw cash from banks. Responding to the CPI(M)’s Elamaram Kareem, she said GST is only imposed on banks as they purchase cheque books from printers. She added that no GST is imposed on ICU rooms and emergency services in hospitals, and reiterated that there is no GST on loose food items so as to ensure the poor are not burdened amid inflation.

The minister clarified that tax is levied only on the construction of a new crematorium and not on existing crematoria, mortuaries or funeral services.

“In fact, 10 transactions from ATMs are totally free from banks, this includes five from the parent bank in which the customer holds an account and another five for withdrawals from ATMs of other banks… Also, a 5% tax is imposed only on hospital rooms that have a rent of ₹5,000 and above… There is also no tax on customer cheques,” she told the Upper House in a speech that went on for about an hour and a half.

Hitting out at the government’s critics, Sitharaman compared the prices of onions, tomatoes and potatoes during UPA-II with those under the current NDA government. She also listed out a number of items to defend the GST regime to state that the prices of several essential items decreased with the introduction of GST in the country.

She told the Upper House that the tax on tooth powder was 17% earlier, which was brought down to 12% under GST. Tax on hair oil was reduced from 23.9% to 18%, on soap from 29.9% to 18%, on footwear from 21% to 18%, on paint from 31.5% to 18%, on sugar 6% to 5%, on washing machines 31.8% to 18%, and so on, she said.

The minister said both the government and the Reserve Bank are taking steps to bring down inflation below 7% and then further under 6%. The government has tasked the RBI with ensuring that the consumer price index (CPI)-based inflation remains at 4% with a margin of 2% on either side.

“The Indian economy compared to the situation prevailing in our peer group economies and several developed countries is doing better. Our macroeconomic fundamentals are strong. Nobody is in denial about price rise. We are not running away. The government has adopted a targeted approach, based on ground-level inputs, to tackle retail inflation which is ruling at around 7%,” she said.

Sitharaman went on to compare the taxes levied by various states prior to the GST regime and when she mentioned West Bengal, Trinamool Congress (TMC) MPs staged a walkout from the Rajya Sabha after the Chair did not allow their leader to raise a point of order for mentioning the state’s name.

Derek O’Brien of the TMC asked the finance minister why the Indian rupee was depreciating despite US inflation rate being higher than India’s rate. “We know that the rupee has jumped up 28 times. In the US, inflation is at 9%. In India, inflation is at 7%. I want to know from the finance minister as to why the rupee is depreciating, because in the US, 9% has peaked off,” he said.

To this, Sitharaman replied that there is no collapse in the value of the rupee. “The currency of a country does not just get determined by inflation. There are several other parameters… And actually, if you compare the Indian rupee versus other currencies, it is appreciating in its manner.”

She said that the Indian economy compared to the situation prevailing in peer-group nations and even developed countries is “definitely much better”.

There is no GST on withdrawal of cash from banks: FM Sitharaman
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“Bangladesh is demanding a loan of $4.5 billion from the IMF because they are facing a balance of payments problem. Sri Lanka is asking the IMF for $3.5 billion. Pakistan is in total asking the IMF for $7 billion. India has complete reserves, our macroeconomic fundamentals are perfect,” she said.

Participating in the debate, Aam Aadmi Party MP Raghav Chadha said energy tax, which is levied on fuels such as petrol and diesel, is one the highest in the world and has a cascading effect on the common people. “Besides, GST collection grows in proportion to the inflationary growth in prices and the government would never intend to reduce it. GST is trying to make a common person poorer,” he said.

To this, Sitharaman said that there were more than 229 items with 28% GST, which has now been reduced to about 28 items. “Items are being lowered from a higher tax rate to a lower tax rate. If inflation is higher, consumption will rather come down and my tax revenue will go down. Their own Delhi finance minister and now the Punjab minister are also there in the GST Council,” she said.

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