KUCHING: The Goods and Services Tax (GST) for the banking sector will be imposed on fee-based services and not according to the amount of financial transaction.
According to The Association of Banks in Malaysia (ABM), financial services such as cash deposits or withdrawals, loans and credit advances, late payment as well as interest earned from savings or fixed deposits are exempted from GST. However, the processing fees charged by the respective financial institution would be taxed with GST.
“All goods and services supplied in Malaysia would be taxable unless specifically exempted by the tax authorities. Given the wide array of commercial banking products and services, we are of the view that the banking public would be better served with as detailed a list as possible.
“That way they will be aware of what types of bank products and services are subject to GST and those which are not,” ABM executive director Chuah Mei Lin said in a press release issued recently. Touching on the issuance of cheques for payment, only the processing fee will be subjected to GST. Similarly, the cost of the cheque book (excluding stamp duty) and the service fee for encashment of the cheque over the counter will also attract GST.
“Finance charges in respect of the use of a credit card, debit or charge card are not subject to GST but the annual subscription fee, if any, charged for a credit card will attract GST in place of the RM50 service tax presently payable. GST is also payable with respect to card fees for debit and charge cards unless fees are waived,” the statement continued.
Additionally, fees and charges which are imposed to compensate for loss, damages or in cases where customers fail to meet certain requirements or conditions are not subject to GST. Examples of such charges are late payment charges, replacement fee for lost card/book/PIN and unauthorised overdraft fees. The statement advised customers to refer to their respective banks for the revised fee payable after the inclusion of GST, where applicable, for each product and service.
ABM has published a document on its website which lists out the GST treatment by its commercial bank members on over 300 general bank products and services. Members of the public can view the list together with a set of frequently asked questions and answers on ABM’s website www.abm.org.my.