New TDS provisions for banks, Clarification soon: CBDT Chairman
The CBDT will shortly release a circular to “clarify” the processes for the application of new TDS laws relating advantages or prerequisites earned in a business or profession for various stakeholders, including banks. Nitin Gupta, the chairman of the CBDT, stated that the board, which develops policies for the Income Tax Department, will provide a formal explanation of the matter, including the “urgent” problem of one-time settlement (OTS) that the banks are dealing with.
“We will make our stance clear in a way that benefits all parties. A clarification circular will be released by us very soon ” During a conversation, he remarked.
Gupta stated that the upcoming circular will cover every concern raised under section 194R of the Income Tax Act.
Even though the CBDT had released a set of instructions in June about the applicability of the newly added section 194R of the Income Tax Act, the banking industry had unique concerns regarding their operations and enterprises.
Recently, bank representatives sent a letter to the CBDT asking for clarification on the boundaries and application of section 194R because they believe that the recently enacted provision in the Budget will require them to withhold a 10% tax at source from incentives provided to business customers through credit cards and loan forgiveness programmes like the one-time settlement.
In the I-T Act, a new section 194R, was added as part of the Budget 2022–23, requiring tax to be deducted at source (TDS) at a rate of 10% by anyone supplying a resident with benefits or perquisites that exceed Rs 20,000 per year and are related to the resident’s trade or activity.
The new provision came into effect from July 1st.