No service tax for users of Debit and Credit Cards

The Indian Union budget for 2006-07 had some new provisions related to service tax being levied on automated teller machines (ATMs). This caused some confusion amongst the users of debit and credit card in the country.

The finance ministry of India has now announced that the new tax on ATMs is not to be levied on bank customers using credit, debit, and ATM cards. This would help clarify any doubts on implementation proposed in the union budget for the upcoming financial year.

The ministry said in a statement: “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. When ATMs are operated, maintained, or managed by banks on their own, service tax liability does not arise.”

This means that the tax is only leviable if the services provided are in relation to operations, maintenance, or management of ATMs and are outsourced by banks to third parties.

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