No TDS on Interchange Fees charged on Credit/Debit Card Transactions: CBDT [Read Notification]


The Central Board of Direct Taxes, as per its Notification published on June 17th, directs that no deduction of tax under Chapter XVII of the Income Tax Act shall be made on certain kind of payments made by a person to a bank listed in the Second Schedule to the Reserve Bank of India Act, 1934 or to any payment systems company authorized by the Reserve Bank of India under Sub-section (2) of Section 4 of the Payment and Settlement Systems Act, 2007. However, Foreign Banks are completely excluded from this.

The said Notification applies to all payments in the nature of bank guarantee commission, cash management service charges, depository charges on maintenance of DEMAT accounts, charges for warehousing services for commodities, underwriting service charges, clearing charges (MICR charges) including interchange fee or any other similar charges by whatever name called charged at the time of settlement or for clearing activities under the Payment and Settlement Systems Act, 2007, credit card or debit card commission for transaction between merchant establishment and acquirer bank. Etc.

Read the full text of the notification here.