Banks have sought clarity from the Central Board of Direct Taxes (CBDT) over newly introduced Section 194R of the Income tax Act regarding TDS norms.
As per Section 194R in the Budget for FY23, any person providing a resident a benefit or perquisite arising from a business or the exercise of a profession by such resident, will ensure that tax has been deducted at the rate of 10% of the value of the benefit or perquisite.
Regarding this, representatives of banks and NBFCs sought to know whether the TDS provision would apply to incentives relating to credit cards. In a meeting with CBDT last month they explained issues in determining the nature of each transaction, business or personal, made through a credit card for TDS purposes.
Further, banks have also raised the issue of TDS on loans waived through one-time settlements or other schemes, and a relief on the front is expected soon.