Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

TDS U/s 194J

swohra (none) (537 Points)

16 June 2010

Dear Members

Are Bank Processing Charges (Fees) liable for TDS?

Thanks in advance..

Reply
Follow
Share

6 Replies

C.A Alok Mukherjee (service) (462 Points)
Replied 16 June 2010

Interesting question. Had this payment be treated as Professional fees in nature, TDS applicable. But to my mind,it is the recovery of administrative cost for loan processing formality as same like other bank charge.

Upgrade to CAclubindia Pro. Subscribe Now!

SRINIVASA MURTHY (Asst Manager (Finance)) (186 Points)
Replied 16 June 2010

s, i agree with Mr. Alok.

for further details plz c the below given link, the discussion on the above subject /forum/tds-on-service-fee-to-scheduled-bank-13918.asp

G.M.Muthu (Associate) (54 Points)
Replied 16 June 2010

As far as TDS is concerned, the services availed by the client being of a professional nature involving proper financial appraisal, verifying the credit worthiness, asset particulars, securities provided, etc, it qualifies to be a professional service liable for TDS under Section 194J of the Income Tax Act, 1961.

However, Section 196 also covers only RBI not for all banks for non-deduction of TDS on any sums,

My opinion to deduct tax on such payment other than such payment to RBI

Aneesh (Pursuing CA) (101 Points)
Replied 17 June 2010

Any payments made to Bank(irrespective of what they might be) are not subject to the Provisions relating to TDS.

Please correct me if I'm wrong

G.M.Muthu (Associate) (54 Points)
Replied 17 June 2010

Aneesh

You can't say like that,

because income of bank not exempt from tax

Upgrade to CAclubindia Pro. Subscribe Now!

Aneesh (Pursuing CA) (101 Points)
Replied 18 June 2010

Mr Muthu,

I agree that Income of Bank is not exempt from Tax, but Im still very certain that Loan Processing Charges or any such transactions are subject to TDS. Although I cant get the proviso as of now. Will let you know by today.