Banks body, Indian Banks’ Association (IBA) has submitted suggestions with the department of financial services (DFS) ahead of the Budget for 2022-23.
Accordingly, IBA has urged the finance ministry to set up special dispute resolution mechanism, along the lines of the Committee on Disputes, with strict timelines for the completion of appeal process to cut litigations between the tax department and the banks.
Regarding GST notices, IBA has urged the government to ensure that the GST doesn’t apply to the levy of penal interest imposed on the customer in case of a default, or delay in repayment and non-compliance of loan conditions. Thus, provide necessary clarification that the banks are not subject to such notices, as 2019 Central GST circular has clarified that such additional interests won’t attract GST, but authorities are still issuing notices to banks in this regard.
IBA has also sought clarity as to who is liable to pay the GST on the sale of repossessed assets, banks or the defaulters, especially where the defaulters are registered under the GST framework.
Further, it has also suggested to raise the amount of deductions from 10 percent for provision for bad/doubtful debts made by rural branches under section 36(1) (VIIA) of the Income Tax Act, 1961. Whereas, the quarterly issuance of TDS certificate should be scrapped now, the I-T department should allow it to be issued only annually to cut banks’ compliance burden.