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Banks’ business correspondents seek relaxation in GST & TDS


Mumbai: Banks’ outreach agents, called as business correspondents or bank mitras, have sought for an immediate rebate on all their tax-related obligations such as GST and TDS along with a special hardship allowance for a period of at least six months till the troubles surrounding covid-19 lockdown persists.

They have alleged that banks are passing on added tax liabilities on their agents operating in rural areas and underbanked urban localities, thereby affecting their daily livelihoods. This is impacting their ability to operate smoothly, hindering timely disbursement of government’s Rs.1.75 lakh crore relief package to those most in need of it.

“Banks load their 50% GST loss on BC Agent fee which makes the GST 150%. We plead that GST on fee for BC services be made NIL immediately…27% GST on BC Agents fee may (also) be made NIL,” Business Correspondents’ Federation of India (BCFI) said in a letter written to Department of Financial Services (DFS).

They have additionally, also sought a monthly fixed income of Rs.5000 for all BC agents along with a share of incentive on fee charged on digital transactions through their micro-ATM networks. “(This) would go a long way in ensuring continued services during these tough times,” they said.

BCFI is an industry body of leading corporate BCs representing approximately 1 million business correspondents.

These agents are typically small kirana shop owners or merchants who partner with banks to extend key banking services such as withdrawals, deposits and domestic remittances in localities without branches or ATMs.

While they have been deemed as essential services by the Home Ministry during the lockdown, the smooth functioning of these agents has assumed even more significance as they are crucial cogs in government’s DBT architecture under PMGKY scheme, claim stakeholders.

“Next two months will be very crucial, BC agents are facing a lot of trouble, so we have requested for a hardship allowance of Rs 5000 for each BCs to help tide through these difficult times,” said Seema Prem, CEO FIA Technology, a BC service provider. “The transaction fee is anyway very minuscule and given that the transaction volumes have been hit, their incomes have also fallen sharply.”

Account opening has been worst hit with FIA Global opening less than a lakh accounts in a month from five lakh earlier, Prem said. “Transaction volume daily average has also dipped nearly 60% to Rs 53 crore a day from Rs 85 crore.”

ET had earlier reported that these BC agents are facing logistical and operational hurdles in proper disbursals of relief package to the intended beneficiaries as several of them faced travel restrictions by local authorities and shortage in cash supply. Furthermore, remittance services which formed a key chunk of their daily businesses have also been down over 80% in the lockdown period.


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