Taxing the Banks – Budget Report

In a potentially controversial move a 10 per cent VAT would be slapped on banks from January 2003.rn

rnFinance Minister Choksy said no input credit will be permitted but VAT will not be charged on gross income but on a base composed of net profits and employee emoluments in a bid to prevent a rise in interest costs.rn

rnMeanwhile the Debit Tax, which was imposed only on current accounts will be extended to all accounts, to prevent tax avoidance. However, savings accounts holders withdrawals up to a total of Rs 20,000 a month will be exempted from the tax.rn

rnThe government hopes to generate an estimated Rs. 2.75 billion from the exercise.rn

rnThe government was earlier earning around Rs. 10 billion from NSL and Turnover Tax which were lifted.