CBDT A detailed clarification said that OTS or loan waiver by a bank will not be treated as profit or perquisite and will not face tax deduction at source as they will have to bear the additional cost of deduction of tax in addition to the deduction.
This exemption will be available to all public financial institutions, scheduled banks, co-operative banks, rural development banks, state financial corporations and state industrial investment corporations.
It will also be available to deposit taking NBFCs, systemically important non-deposit taking NBFCs and public companies that provide long-term finance for construction or purchase of houses. India For residential purposes and asset reconstruction companies.
Budget 2022-23 introduced a new section, 194R in income tax act, which requires TDS at the rate of 10% by any person providing any profit or perquisite of more than ₹ 20,000 in a year to a resident arising out of his business or profession. Bankers felt that the provision made them liable to TDS in case of OTS or loan waiver, which would be treated as benefit to the customers and represented the issue to CBDT, seeking clarity.
The CBDT also clarified that no TDS will be levied on issue of bonus or rights shares by listed entities.
As per the clarification, if a company organizes dealers’ conferences to educate the dealers about its products, it will not be considered as a perquisite.