Service Tax on ATM Interchange, Service Tax

[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.

Posts / Replies

[PAWAN KUMAR]

Dear Sir,

As per my view, issuing banks need to pay service tax of ₹ 2.20.

[VENKATRAMAYYA K]

Hi, Thanks for sharing your view.

Issuing bank can adjust the service tax of ₹ 1.85 paid by Acquiring bank with recovered from customer of ₹ 2.20 as the transaction is same. Isn't double tax if issuer pay service tax of ₹ 2.20.

[MARIAPPAN GOVINDARAJAN]

Thanks for the experts sharing their views in this regard.