By G. Sharmila
The upcoming goods and services tax (or GST) has Tiger’s tail tangled in knots. First, she was informed that GST would be charged on her credit card annual fee. Now it is set in stone that banks will also charge GST. Is this the end, she wonders?
Tigers are frugal members of the animal kingdom. They waste no food; after a meal, all kills are stashed away carefully for a later meal and water is used sparingly. Except when it comes to naps, the longer the snooze time, the better!
Sadly, Tiger foresees fewer naps and more work in the near future thanks to the implementation of the goods and services tax (GST). With the cost of living expected to go up for Tigers and humans alike, Tiger predicts she’ll have to work twice as hard so she can catch the occasional nap.
What’s for sure is that us Tigers and the two-legged homo-sapiens will be spending less after April 1st, at least until we get used to the idea of having GST around. Tiger is even mulling getting rid of her credit card since GST will be charged on the annual fee. But this will be tough to do seeing that Tiger does a lot of traveling and online shopping.
To the uninitiated, financial services are generally classified as exempt supplies where no GST will be imposed on interest charged by banks. However, fees, service charges, commissions, or other similar charges imposed by banks will be subject to 6% GST. Fees and charges for Islamic products are also subject to GST, though not the profits incurred.
Paying more for her credit card usage does not pinch as much as the fact that 6% GST will be charged by banks for all MEPS transactions and online banking transactions. These include online interbank Giro transfers, such as bill payments. This is what the Association of Banks Malaysia (ABM) told the Malay Mail Online last Thursday.
According to the article, ABM executive director Chua Mei Lin said GST would be payable in respect of a basic charge or fixed fee in connection with commercial banking products and services. However, interest or spreads charged by commercial banks are not subjected to GST, she was quoted saying by the online paper.
Customs director-general Khazali Ahmad told the paper that if there is a bank charge or fee, GST will be imposed on those charges, meaning that the 6% tax will be imposed on the bank charge, not the transaction amount.
Is that honestly supposed to make Tiger feel better? By imposing online banking services, will that not discourage people (and Tigers) to use these types of services? According to Bank Negara Malaysia data, there were 17.6 million online banking customers (corporates and individuals) as of end 2014, so there’s a sizeable population that will be affected by the GST.
What’s more, according to a frequently asked questions section on GST on CIMB Bhd’s website, GST will also be imposed on ATM card annual fees. So what this means is that if you have a number of ATM cards like Tiger does, you’ve basically dug your own grave.
And if you thought that you could “escape” carrying out your bill payments via online banking and do them at the post office instead, watch out, because Pos Malaysia is also charging GST for over-the-counter bill payments. According to the Malay Mail Online article, service fees collected on behalf of billing agencies will incur GST. It said that for example, if your bill is RM100 and the service fee is RM1, you would end up paying RM101.06 after GST.
However, according to Pos Malaysia, the service fee will be absorbed by the billing agencies in most cases, so the customers need not pay additional fees beyond the bill amount.
Tiger believes this is unlikely to happen as these billing agencies or service providers will incur higher input, transportation and various other costs due to GST and hence want to pass the cost to the customers. Therefore, whether you choose to use online banking or Pos Malaysia counters for your bill payments, you’re still getting the short end of the stick.
Tiger can growl and hiss all she likes; the fact of the matter is GST is coming our way and there is nothing we can do about it, short of stashing our cash under our pillows. Bitter as the cud it may be, GST is here to stay. For good. End of story.
GRRRRR!!!
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