Section 194H of the Income-tax Act, 1961 – Commission or brokerage – Clarifications regarding Turnover Commission payable by RBI to Agency Banks – exemption from TDS
The work of receipt of tax payments and issue of refunds is conducted by the Banks authorized for such purposes by the Reserve Bank of India (RBI). As a compensation for the work so conducted, the Central Government pays to the Banks, through RBI, commission termed as “Turnover Commission”.
It has been represented to the Board that the requirement of tax deduction at source under section 194H should not be applicable in respect of Turnover Commission payable by the Reserve Bank of India to the Agency Banks (Banks authorized for conducting Government business) for performing the general banking business of the Central and State Governments on behalf of RBI.
The matter was considered in the Board and it has been decided that tax would not be required to be deducted by RBI on the amount of Turnover Commission paid or credited by it.
