ATMs to turn costly under GST, small banks to be hit
Industry Trends
03-07-2017 00:00:00
ATMs to turn costly under GST, small banks to be hit

Deploying automatic teller machines (ATMs) is set to get more expensive as ATMs have been put under the highest tax slab of 28% under the new Goods and Services Tax regime. 


With the machines becoming more expensive, smaller banks and newly-licensed small finance banks could slow down deployment of teller machines, causing further problems for the industry. Industry insiders say point-of-sale devices and other digital payments hardware were put under the 18% slab –– a slab in which ATMs should have been included, media report said. 


Confederation for ATM Industry (CATMI), the industry association of companies which deploy and manage ATMs, is planning to reach out to the GST Council, the revenue secretary and the finance ministry to take up the issue and request them to revise the tax rate on teller machines. 


"As an industry, we are planning to reach out to the government to bring ATMs on par with other payment terminals as otherwise there will be a general 7-8% increase on the cost of terminals," said Ravi Goyal, managing director of AGS Transact Technologies, which deploys and manages ATMs in the country. 


Not only have prices of these machines gone up, even service cost for ATMs will go up as tax rates have been revised to 18% from 15% previously. This would be applicable for servicing charges, annual maintenance contracts which will have to be borne by the banks eventually. 


"The biggest advantage for banks is that now they will be able to claim input tax credit on GST which will improve their cash flows and help in their business," said Goyal


After demonetisation, ATM deployment has slowed down as banks were preoccupied with adopting the latest digital payment instruments. Also, banks prefer asset light payment solutions for financial inclusion, like micro ATMs and Aadhaar Pay rather than deploying expensive ATMs.

-K Ramanathan

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