Tds on credit card commission

This query is : Resolved

NIRAV (Querist)
Follow

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

NIRAV

NIRAV (Querist)
Follow

24 March 2012 thank u very much.

C A S.S.Agarwal, M.Com.,LL.B,

C A S.S.Agarwal, M.Com.,LL.B, (Expert)
Follow

24 March 2012 The expert is correct and I agree with him

NIRAV

NIRAV (Querist)
Follow

25 April 2012 but can any one tell me what can be drafted in a letter to the income tax officer..?

Aashok Kumar Sharma online

Aashok Kumar Sharma online

(Expert)
Follow

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?

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now