The Hindu : National : No Service Tax to be levied on ATM users

Online edition of India's National Newspaper
Saturday, Mar 11, 2006

National

National

No Service Tax to be levied on ATM users

Special Correspondent

It is for outsourced services regarding ATMs

NEW DELHI : In a bid to clear the confusion over the levy of service tax on automated teller machines (ATMs), as proposed in the Union budget for 2006-07, the Finance Ministry has announced that the new tax on ATMs is not to be levied on bank customers using credit, debit and ATM cards.

The Ministry said: "Service tax is not leviable for use of ATM by the cardholders. The proposed service tax will not result into any additional tax liability on the users of ATMs."

The clarification came in the wake of apprehensions in some quarters as to whether the proposed service tax will have any impact on holders of credit cards, debit cards, charge cards and other payment cards who use ATM services for withdrawal of cash.

Only for outsouced services

The tax is to be leviable only if the services provided are in relation to operations, maintenance or management of ATMs and are outsourced by banks to third parties. In effect, third parties which provide services to banks in relation to ATM operation, maintenance or management are covered under the category of the proposed service.

"When ATMs are operated, maintained or managed by banks on their own, service tax liability does not arise," the statement said.

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