TDS (tax deduction at source) exempted on certain payments to reduce compliance burden
The Revenue Department has exempted tax deduction at source (TDS) on certain payments like, bank guarantee commission and charges for warehousing services for commodities, to reduce compliance burden on businesses.
"Payment towards bank guarantee commission, cash management service charges, depository charges on maintenance of Demat accounts, charges for warehousing services for commodities and underwriting service charges made to the banks ... can be made without TDS with effect from January 1, 2013," the Department said.
The move is aimed at mitigating compliance burden on businesses held by individuals, firms or corporate who are using the financial services offered by banks, it added.
The Central Board of Direct Taxes (CBDT) has issued a notification granting exemption from TDS on such payments.
Also, payment without TDS of credit/debit card commission on transaction between the merchant establishment and acquirer banks has been facilitated by the CBDT
"This will also positively impact the use of plastic money in the economy," the Department said.
It further said the CBDT's move will obviate the uncertainties about the applicability of specific TDS provisions on such payments mentioned and consequent litigation.