Tds On Payment to American Express

TDS 1499 views 2 replies

Good Afternoon

I want to ask Whether TDS Should b deducted on Payment to American Express When Payment is Charged to AE Card and in Invoice by American Express, Details of Airlines Tickets is given along with Service Charges written as GST @ 1.8% and service Fee Separately.

Replies (2)
TDS u/s 194C will be attracted only on the service component and not the entire payment made to American Express..
TDS U/s 194C is applicable only if the aggregate service amount during the year exceed 100000 or 30000 in case of single bill..
else no TDS is attracted...
TDS not deductible on sum paid to banks for utilization of credit card facilities

The commission retained by the credit card company is therefore in the nature of normal bank charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment.

Commission paid to the credit card companies cannot be considered as falling with in the purview of S.194H.

Even though the definition of the term “commission or brokerage” used in the said section is an inclusive definition, it is clear that the liability to make TDS under the said section arises only when a person acts on behalf of another person.

In the case of commission retained by the credit card companies however, it cannot be said that the bank acts on behalf of the merchant establishment or that even the merchant establishment conducts the transaction for the bank.

The sale made on the basis of a credit card is clearly a transaction of the merchants establishment only and the credit card company only facilitates the electronic payment, for a certain charge.

The commission retained by the credit card company is therefore in the nature of normal bank charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment.

Accordingly, concluded that there is no requirement for making TDS on the ‘Commission retained by the credit card companies.

So no TDS to be deducted.


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