Date:09/03/2006 URL: http://www.thehindubusinessline.com/2006/03/09/stories/2006030902770600.htm

Back Service tax on ATM not to hit users

Our Bureau

New Delhi , March 8

The Finance Ministry has clarified that the levy of service tax on automated teller machine (ATM) operations, maintenance or management would not result in any additional service tax liability for users of ATMs.

The Budget 2006-07 had brought the services of `ATM operations, maintenance or management' under the service tax net. A question has been raised before the Finance Ministry as to whether this levy would have any impact on the holders of credit cards, debit cards, charge cards and other payment cards who use ATM for withdrawal of cash.

The Finance Ministry said that service tax would not be applicable on use of ATM by the cardholders. It has clarified that service tax would be applicable only if the services provided are in relation to operations, maintenance or management of ATMs and are outsourced by banks to third parties.

"Third parties who 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," an official release said.