Tds on credit card commission

When a credit card is swiped on a machine at a retail store for payment, a bank (known as the acquiring bank) facilitates the payment to a merchant after deducting its commission. Typically, the bank charges a 2% commission for facilitating payments through credit cards. The I-T Act (under section 194H) requires an assessee to deduct 10% TDS on commissions or brokerage paid to any entity.

But we are not deducting TDS on such types of transection.

Please suggest that TDS is applicable of this types of tracsection or not ?

Replies (4)

 

Dear Satyendra, in such a transaction what factually happens is that the customer transacts with the merchant (i.e the retail store) and credit card company/bank only facilitates payment of the transaction amount for which it charges fees or commission. Neither the credit card company nor the merchant are acting as agent of each other, in other words, both are acting on Principal to Principal to which provisions of section 194H doesnot apply. Hence not liable to deduct TDS.

Originally posted by : satyendra kumar singh


When a credit card is swiped on a machine at a retail store for payment, a bank (known as the acquiring bank) facilitates the payment to a merchant after deducting its commission. Typically, the bank charges a 2% commission for facilitating payments through credit cards. The I-T Act (under section 194H) requires an assessee to deduct 10% TDS on commissions or brokerage paid to any entity.

But we are not deducting TDS on such types of transection.

Please suggest that TDS is applicable of this types of tracsection or not ?



 

I think so TDS is charged under 194 C @ of 2% for Bank & Retail Shop Contract...

Nilesh thank you for your comment, may i request you to refer the Hyd ITAT judgement in case of Dy. Commissioner of Income- V/s M/s. Vah Magna Retail (P) Ltd., tax, Hyderabad

Thanks a lot Mr. Mohit.

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