CBDT grants TDS exemption on payments towards financial services provided by banks
January, 05th 2013
The Central Board of Direct Taxes (CBDT) has granted individuals, firms and corporates using financial services offered by banks from tax deduction at source (TDS) on the payments of certain categories, in order to mitigate compliance burden on businesses.
Payment towards bank guarantee commission, cash management service charges, depository charges on maintenance of demat accounts, charges for warehousing services for commodities and underwriting service charges made to the banks can be made without TDS with effect from 1 January 2013, CBDT said in a notification issued today.
The notification also facilitates payment without TDS of credit/debit card commission on transaction between the merchant establishment and acquirer banks. This will also positively impact the use of plastic money in the economy, the notification said.
CBDT said the notification would obviate the uncertainties about the applicability of specific TDS provisions on the payments mentioned above and consequent litigation.