By IANS,
New Delhi : Certain payments like bank guarantee commission, depository charges on maintenance of Demat accounts and charges for warehousing services for commodities stand exempted from tax deduction at source (TDS) from the New Year.
The finance ministry Friday said this has been decided to reduce compliance burden on businesses held by individuals, firms or corporates who are using the financial services offered by banks.
“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, which are listed in the Second Schedule of the Reserve Bank of India Act, 1934, (excluding foreign banks) can be made without TDS with effect from Jan 1, 2013,” the ministry said in a statement.
The Central Board of Direct Taxes (CBDT) has issued a notification granting exemption from tax deduction at source (TDS) on the payments of certain categories.
The new rule has been made effective from Jan 1, 2013, it said.
The new norms also facilitate payments without TDS of credit/debit card commission on transaction between the merchant establishment and acquirer banks.
This will positively impact the use of plastic money in the economy.
“The notification will obviate the uncertainties about the applicability of specific TDS provisions on payments mentioned above and consequent litigation,” said the ministry.