Organizing ATMs is set to get costlier as they have been listed under the highest tax portion of 28% under the latest GST rule. With the machines turning out to be more costly, newly licensed small finance banks and smaller banks could slow down the operation of ATMs, resulting further issues for the market. Industry analysts say that digital payments hardware and other point-of-sale devices were listed under the 18% portion, a section in which ATMs should have been incorporated.
The market organization of firms that manage and deploy ATMs, Confederation for ATM Industry (CATMI), is preparing to reach out to the Revenue Secretary, the GST Board, and the Finance Ministry to take up the problem and ask them to modify the rate of tax on ATMs. “As a market, we are preparing to reach out to the Indian Government to bring ATMs on balance with other transactions terminals; if not there will be a common 7–8% elevation on the price of terminals,” claimed Managing Director of AGS Transact Technologies, Ravi Goyal, which manages and deploys ATMs in India.
Not only the costs of these machines have elevated, even service price for ATMs will tower as duty charges have been modified from 15% previously to 18% currently. This would be valid for annual maintenance contracts and servicing charges, which will have to be tolerated by the banks ultimately. “The major benefit for banks is that now they will be allowed to declare input duty credit on GST, which will enchase their flows of cash and assist in their venture,” claimed Goyal.
Post demonetization, ATM organization has taken a sharp declination since banks were in their own world with accepting the new digital transaction tools. Also, banks favor asset light transaction solutions for economic inclusion, such as Aadhaar Pay and micro ATMs more willingly than organizing costly ATMs.
In a previous interaction with the media, MD for South Asia and India at NCR Corporation, Navroze Dastur, claimed that they were restoring old machines for banks and not organizing new ones. “We were expanding at 15–16% before demonetization, which has declined to 8–10%.”