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Tax on ATM services won't affect users

An official said the tax is not imposed on the banks that manage their own ATMs but on third party service provider.

india Updated: Mar 02, 2006 21:01 IST

ATM users need not worry about shelling out extra money because of 12 per cent tax imposed on credit and debit card services as banks will get input credit.

Allaying fears expressed in certain quarters that the new levy will be passed on to the customers, a key finance ministry official on Thursday said the tax is not imposed on the banks which manage their own ATMs but on third party service provider and banks will get input credit on the increased bill.

"It is a misapprehension. It is not a tax on users. Nobody will be affected. Neither banks, nor service providers, nor customers," Joint Secretary in Central Board of Excise and Customs R Sekar told reporters.

On the need of imposing the levy, Sekar said the move was taken to remove any possibility of distortions in the system.

He said the tax is vatable, which means that banks being billed higher amount by ATM service provider because the levy will get input credit from the Government.

Sekar said 90 per cent of business support services used by banks were covered but were bunched together for matter of convenience.

First Published: Mar 02, 2006 21:01 IST