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Banks have approached the Central Board of Direct Taxes (CBDT) for clarity on the scope of Section 194R of the Income Tax Act, as they fear the newly introduced provision will force them to deduct a 10% tax at source on incentives extended to large business customers through credit cards. Accordi
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FAQ :
Banks are concerned about Section 194R of the Income Tax Act, which requires a 10% tax deduction at source on benefits or perquisites provided to residents arising from business or profession.
Banks are seeking clarity on whether the new TDS provision applies to incentives given to large business customers through credit cards and the challenges in determining transaction types for TDS.
Section 194R came into force on July 1.
Yes, no TDS will be deducted if the aggregate value of the benefit or perquisite does not exceed Rs 20,000 in a fiscal year. It also doesn't apply to businesses with an annual turnover not exceeding Rs 1 crore, or professionals with a turnover limit of Rs 50 lakh.
Banks have informed the CBDT of implementation challenges, but the CBDT has declined to defer the applicability as it would require parliamentary approval.
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