GST hike on chit fund opposed in Karnataka

The Karnataka Chitsters' Association has opposed the 6 per cent hike in GST on chit fund services.

The association has sought a GST exemption for chit fund services and will stage a protest in support of its demand, between 10 am and 4 pm on July 25.

The hike in GST will reduce the returns on savings and increase the cost of borrowing, thereby defeating the very purpose of joining a chit scheme, the association said.

Shivaprakash, a chit subscriber, said tax hikes over the years had severely affected his returns.

“The dividend has decreased considerably. I started chits when the tax was 5 per cent, that went up till 10.5 per cent. Then, the GST was enforced and the tax was increased to 12 per cent. Now they have raised it to 18 per cent, which is really high,” he said.

“For example, for Rs 1 lakh, the interest earlier was Rs 600. But now, the subscribers will have to pay Rs 900. The subscriber may not renew his chit due to this. Without renewal, there is no business and without business, the company cannot function. About 99 per cent of chit fund companies have come down to 50-60 per cent turnovers due to this,” said Vijayakumar T C, managing director, SBV Chits Pvt Ltd., Basaveshwaranagar.

The CEO of a digital platform said the 6 per cent increase in GST would translate to additional costs for the subscriber.