TDS

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

06 July 2010 Hotel have provided a service to its guests by allowing payment through credit card/debit card etc. Guest swap cards and accordingly hotel receive payment from banks with whom hotel have agreement.

Bank charge certain commission from Hotel for providing such service .
Is this service laible to TDS under commission/Brokerage head.

Aditya Maheshwari

Aditya Maheshwari (Expert)
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06 July 2010 No TDS deduction should be made on the commission paid to bank.

Querist : Anonymous

Querist : Anonymous (Querist)

07 July 2010 But in the said section , nowhere it is written that commission paid to BANK will not be liable to TDS U/s 194H.

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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27 July 2025 Great question! Here’s a clear explanation:

Issue:
The hotel pays commission to banks for payments received through credit/debit cards. Is TDS applicable on this commission under Section 194H (Commission or Brokerage)?

Explanation:
Section 194H requires TDS on commission or brokerage payments.
However, banks are excluded from the definition of 'commission or brokerage' under Section 194H for these types of transactions because:
The amount charged by banks for credit/debit card services is considered a service charge or processing fee, not commission or brokerage.
Banks are regulated financial institutions and commission paid to them for card services generally does not attract TDS under 194H.
There is no specific mention in the law exempting banks explicitly, but the interpretation and practice by tax authorities and professionals is that TDS is not deductible on commission paid to banks for card services.
Practical position:
You do not deduct TDS on the commission paid to banks for card payment services.
The payment is treated as service charges for banking services, not commission or brokerage.

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