Volume : 11, Issue : 3, MAR 2025

CAPITALIZING ON BUSINESS DEVELOPMENT AND CHALLENGES IN THE DIGITAL ERA RESEARCHED BY STUDENTS, PG DEPARTMENT OF COMMERCE WITH COMPUTER APPLICATIONS, MANNAR THIRUMALAI NAICKER COLLEGE MADURAI.

A STUDY ON IMPACT OF GST ON BANKING SECTOR

SINDHU. S, DR. MANJULA.S

Abstract

The impact of the Goods and Services Tax (GST) on the banking sector, analyzing the transformations in operational dynamics, tax structures, financial performance. The introduction of GST in India on July 1, 2017, marked a major shift in the country's taxation landscape. For the banking sector, GST brought significant changes, particularly in the way services were taxed, leading to various operational and financial challenges and opportunities. The research investigates how GST has influenced the pricing and structuring of banking services. Prior to GST, the banking sector operated under a complex system of indirect taxes such as service tax, VAT, and others. GST replaced these with a single, unified tax system. While the goal of GST was to simplify taxation and create a more transparent and efficient tax system, its impact on the banking sector has been multifaceted. Additionally, this study examines the compliance burden faced by banks in adhering to the GST framework. Banks had to modify their invoicing systems, accounting procedures, and tax filings to meet the new requirements. The impact on operational costs, particularly in terms of software upgrades and staff training, is analyzed to understand the financial strain on banks, especially smaller institutions. The research evaluates the effect of GST on the profitability and competitiveness of banks. The shift in tax burdens also impacted the cost structure of banking services, which ultimately affected customers, leading to potential price hikes in some financial products. While banks have faced initial challenges in transitioning to the GST framework, there also long-term benefits, streamlined operations, improved compliance.

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