Using ATM? Pay more soon

The interchange fee charged by banks from their customers for using the ATM network of other banks may shoot up by Rs 3-6. Nevertheless, direct customers of banks may not be charged the additional burden of service tax, bankers have said.

This follows the Union Budget announcement on Tuesday to levy service tax on input services received by banks in maintaining the ATM network.

The various operations to be taxed include maintenance and management of hardware, software, cash replenishment, operation of the ATM etc.

A senior official from Financial Software Solutions, a third party ATM service provider, said, "we are on a wait-and-watch mode and our finance team is examining the impact of the new provision on our revenues."

ATM deployer NCR is in talks with tax experts to draw up a fresh blueprint on its revenue structure. According to bankers, since the banks could not levy charges on their direct customers for using their own networks, transactions at shared networks would thus get costlier.

Further, tax officials pointed out that the Union Budget announcements on service tax would bring in the input services received by banks to manage the entire gamut of credit and debit card operations under the tax net.

Bankers said the additional costs could not be passed on to customers directly.