CREDIT CARDS

I don't think that the TDS would be required to be made on account of such discount.  As in some cases, the merchants collect the percentage of amount  from their customers over & above the bill amount as the credit card co making the payment deducts some percentage of amount from the merchants while making the payment to the merchant.

so the merchants are at no loss as they recover the amounts from their customers which in turn is being paid to the credit card co.

Also an expenditure is treated as commission, when any service is being rendered to anyone.  In the credit card transactions, the cr card co is not rendering any service to the merchant, it is just paying the amount requried to be paid to the merchant & in turn deducts some percent as discount.  The cr card co is rendering service to teh credit card holder.  so I think that the question of commission does not arise 7 also TDS would not be requried to be made.

Actually we are in receipt of show cause notice in this respect.

The Department's contention is that the acquiring bank renders services for recovery of the bill amount to the retail merchant and hence acts as an agent of the retail merchant. Therefore, the discount is in the nature of commission  which is withheld by the acquiring bank while making payment to the retail merchant. Hence the same should be subjected to TDS @ 10% u/s. 194H

Awaiting for Replies

Yes, many case laws are in this favour. liable for 194 H