Applicability of TDS provision u/s 194H

[A RAVINDRA]

The dealer has provided the option of credit payment to its customers.Dealer get the proceeds from bank after the deduction of commission at agreed rate on credit card swipings. I would like to know whether TDS provision u/s 194H is applicable.

[Surender Gupta]

Explanation (i) of section 194H defines the meaning of commission or brokerage. If the transaction is qualified to be covered by the this explanation, the dealer is required to deduct TDS on commission paid to online payment gateway.

AI Summary

TDS on commission applies where payment gateway commissions arise, requiring deduction when transactions qualify as commission payments.
If a dealer receives credit card proceeds net of an agreed commission, and payments to an online payment gateway fall within the statutory definition of commission or brokerage, the dealer is required to deduct tax at source on such commission payments.