Executive Summary:
This notification, No. 472016, issued by the Ministry of Finance, Department of Revenue, Central Board of Direct Taxes, effective June 17, 2016, exempts certain payments made to specific banks and payment system companies from tax deduction at source (TDS) under Chapter XVII of the Income-tax Act, 1961. It supersedes notification S.O. 3069 (E) dated December 31, 2012. This applies to payments made to banks listed in the Second Schedule to the Reserve Bank of India Act, 1934 (excluding foreign banks), or to authorized payment systems companies under the Payment and Settlement Systems Act, 2007.
Key Points / Main Content:
Tax Deduction Exemption:
* No tax deduction under Chapter XVII of the Income-tax Act, 1961 is required for specified payments.
Eligible Payees:
* Banks listed in the Second Schedule to the Reserve Bank of India Act, 1934 (excluding foreign banks).
* Payment systems companies authorized by the Reserve Bank of India under Subsection 2 of Section 4 of the Payment and Settlement Systems Act, 2007.
Payments Exempted:
* 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, interchange fee, or any similar charges for settlement or clearing activities under the Payment and Settlement Systems Act, 2007
* Credit card or debit card commission for transactions between merchant establishments and acquirer bank.
Supersession:
* This notification supersedes the Government of India, Ministry of Finance Department of Revenue notification S.O. 3069 (E) dated 31st December, 2012.
Effective Date:
* The notification is effective from June 17, 2016.
Impact Analysis:
Banks Listed in the Second Schedule to the Reserve Bank of India Act, 1934 (excluding foreign banks) and Payment Systems Companies authorized under the Payment and Settlement Systems Act, 2007:
Impact: Payments received for specified services are exempt from tax deduction at source.
Action Required: Ensure compliance with the notification and update payment processing systems accordingly.
Individuals/Entities Making Payments to Eligible Banks/Payment Systems Companies:
Impact: No tax deduction at source is required for payments made for specified services to eligible banks and payment systems companies.
Action Required: Update payment processes to reflect the new no-deduction requirement for specified services.
Key Entities Referenced
Income-tax Act, 1961: The primary legislation governing income tax in India, under which the notification is issued.
Ministry of Finance: The government ministry responsible for financial matters, including revenue and taxation.
Department of Revenue: A department within the Ministry of Finance responsible for tax administration.
Central Board of Direct Taxes: The apex body responsible for direct tax administration in India.
Reserve Bank of India: The central bank of India.
Reserve Bank of India Act, 1934: The legislation governing the Reserve Bank of India.
Payment and Settlement Systems Act, 2007: An act regulating payment and settlement systems in India.
New Delhi: The location where the notification was issued, New Delhi, Delhi
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3081 GI/2016 (1)2 THE GAZETTE OF INDIA : EXTRAORDINARY [PART II—SEC. 3(ii)]
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[अिधसूचना स.ं 47/2016 फा.सं. 275/53/2012-आईटी(बी)]
संदीप Zसह, अवर सिचव
MINISTRY OF FINANCE
(Departmnet of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 17th June, 2016
No. 47/2016
INCOME TAX
S.O. 2143(E).—In exercise of the powers conferred by sub-section (1F) of section 197A of the
Income-tax Act, 1961 (43 of 1961) and in supersession of the notification of the Government of India,
Ministry of Finance (Department of Revenue) number S.O. 3069 (E) dated 31st December, 2012, published in
the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (ii), the Central Government hereby
notifies that no deduction of tax under Chapter XVII of the said Act shall be made on the payments of the
nature specified below, in case such payment is made by a person to a bank listed in the Second Schedule to
the Reserve Bank of India Act, 1934 (2 of 1934), excluding a foreign bank, or to any payment systems
company authorised by the Reserve Bank of India under Sub-section (2) of Section 4 of the Payment and
Settlement Systems Act, 2007 (51 of 2007), namely :-
(i) bank guarantee commission;
(ii) cash management service charges;
(iii) depository charges on maintenance of DEMAT accounts;
(iv) charges for warehousing services for commodities;
(v) underwriting service charges;
(vi) 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;
(vii) credit card or debit card commission for transaction between merchant establishment and
acquirer bank.
2. This notification shall come into force from the date of its publication in the Official Gazette.
[Notification No. 47/2016/ F. No. 275/53/2012 – IT(B)]
SANDEEP SINGH, Under Secy.
Uploaded by Dte. of Printing at Government of India Press, Ring Road, Mayapuri, New Delhi-110064
and Published by the Controller of Publications, Delhi-110054.