Service Tax on ATM Interchange

[VENKATRAMAYYA K]

At present, Acquiring banks are charging of ₹ 15+(1.85 service tax) to Issuing banks for each ATM cash withdrawal transaction. Issuing banks are recover ₹ 20 (including service tax 17.80+2.20) from their customers. I would like to know whether issuing banks needs to pay the service tax of ₹ 2.20 or ₹ 0.35 (2.2-1.85). Please suggest.

AI Summary

Debate on Issuing Banks' Service Tax: Pay Full 2.20 or Adjust 1.85 Against ATM Withdrawal Charges? An individual inquired about the service tax obligations for issuing banks on ATM cash withdrawal transactions, questioning whether they should pay 2.20 or only the difference of 0.35, considering the acquiring bank already charges 1.85. One respondent suggested that issuing banks should pay the full 2.20. Another participant argued that the issuing bank could adjust the 1.85 already paid by the acquiring bank against the 2.20 recovered from customers, implying that paying the full amount might result in double taxation. The discussion concluded with appreciation for the shared insights.