Expressing shock at the increase in the Goods and Services Tax (GST) on chit fund services from 12% to 18%, the Tiruchi District Financiers and Chit Funds Association has urged the Center to withdraw the hike.
“The hike came at a time when we were asking for GST exemption for our services,” said association president B. Venugopal, SP secretary. Palaniappan and Councilor Mr. Thangavel at a press conference here on Saturday.
The GST will impact the return on savings for those looking to save tax and the cost of funds will also increase. With reduced returns, those looking to save money may not choose to join vouchers, and voucher funds will not be able to make funds available at low interest rates.
Voucher funds are largely aimed at low- and middle-income earners and the rise will severely affect small businesses that are unable to access banking services, those looking to start new businesses and the self-employed. . They will be forced to borrow money from private lenders at interest rates ranging from 36% to 60% per annum, association leaders have claimed.
Gift vouchers should be fully exempt from the GST, just like financial institutions. The interests of voucher funds, which promote a systematic savings plan in a transparent way and provide funds to the needy in times of need, must be protected so that they reach a wide segment of people and encourage savings, have- they declared and urged the Center to redress the discrepancy in levying the tax on chit fund services and similar services rendered by banks, non-banking financial companies and microfinance institutions.