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TDS on Processing Fees Paid to NBFC

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This query is : Resolved

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This discussion clarifies the applicability of Tax Deducted at Source (TDS) on processing fees. While TDS is generally not applicable on fees paid to banks, it is applicable when paid to Non-Banking Financial Companies (NBFCs). The key difference lies in the nature of payment and regulatory disclosures, with NBFCs facing stricter TDS requirements.

vikas ghodke

vikas ghodke (Querist)

07 July 2022 TDS is not applicable where processing fees paid to bank as per case law DCIT vs Laqshya Media P. Ltd. and other case law.
However TDS is applicable on Processing Fees paid to NBFC.
TDS is deducted on Nature of payment.If nature of payment is same in both case (Bank and NBFC)
Then why TDS is not applicable for bank and why applicable to NBFC
Is there any clarification on this?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

08 July 2022 Most of the banks owned by government and they will disclose all income and pay applicable taxes.
Whereas NBFC owned by private company may not disclose income properly.

vikas ghodke

vikas ghodke (Querist)

11 July 2022 Thank you so much sir. I am really satisfied by your answer.

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