Tds on credit card commission
This query is : Resolved
24 March 2012
Can anyone guide me as to whether TDS has to be deucted on credit card commission charged by the bank from the merchant dealers ?
Guest
Guest
(Expert)
24 March 2012
No tax need to be deducted bank makes d payment to merchant dealers aftrr deducting commission. As such banks r out of the perview of tds. V dont with hold tax on BG commision, processing charges paid to bank etc..
Message likes :
1 times
24 March 2012
The expert is correct and I agree with him
25 April 2012
but can any one tell me what can be drafted in a letter to the income tax officer..?
27 July 2025
Here’s a simple draft you can use to explain the position on **TDS on credit card commission charged by bank from merchant dealers** to the Income Tax Officer:
---
**\[Your Company’s Letterhead]**
Date: \[Insert Date]
To
The Income Tax Officer
\[Address of the Assessing Officer]
Subject: Clarification regarding TDS on Credit Card Commission charged by Bank from Merchant Dealers
Respected Sir/Madam,
We wish to bring to your kind notice that our company accepts payments from customers through credit card transactions. The bank charges commission on these transactions, which is directly deducted from the amount payable to us (merchant dealers) by the bank.
Since the bank deducts commission before making the payment, the commission amount is never directly paid by us to the bank. Therefore, as per the prevailing TDS provisions and consistent industry practice, no Tax Deducted at Source (TDS) is required to be deducted by us on the credit card commission charged by the bank.
We kindly request you to take note of the above position and exempt us from any demand regarding TDS on credit card commission.
Thanking you,
Yours faithfully,
\[Authorized Signatory]
\[Designation]
\[Company Name]
\[Contact Details]
---
Would you like me to customize this further or add any specific references?
---
**\[Your Company’s Letterhead]**
Date: \[Insert Date]
To
The Income Tax Officer
\[Address of the Assessing Officer]
Subject: Clarification regarding TDS on Credit Card Commission charged by Bank from Merchant Dealers
Respected Sir/Madam,
We wish to bring to your kind notice that our company accepts payments from customers through credit card transactions. The bank charges commission on these transactions, which is directly deducted from the amount payable to us (merchant dealers) by the bank.
Since the bank deducts commission before making the payment, the commission amount is never directly paid by us to the bank. Therefore, as per the prevailing TDS provisions and consistent industry practice, no Tax Deducted at Source (TDS) is required to be deducted by us on the credit card commission charged by the bank.
We kindly request you to take note of the above position and exempt us from any demand regarding TDS on credit card commission.
Thanking you,
Yours faithfully,
\[Authorized Signatory]
\[Designation]
\[Company Name]
\[Contact Details]
---
Would you like me to customize this further or add any specific references?
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