The Central Board of Direct Taxes (CBDT), the statutory authority functioning under the Central Board of Revenue Act,  will soon come out with a circular for various stakeholders, especially banks, to "clarify" the procedures on the applicability of new TDS provisions regarding benefits or prerequisites received in a business or profession.

 CBDT Chairman Nitin Gupta said the board, which frames policies for the Income-Tax department,will issue an official explainer on the subject, including the "pressing" issue of one-time settlement (OTS) being faced by the banks. "We will clarify the position that will be helpful to the stakeholders. We will be coming out with a clarificatory circular very soon," he said during an interaction on Friday.

Gupta said all issues on the canvass of section 194R of the Income Tax Act will be addressed as part of the forthcoming circular. While the CBDT had issued a set of guidelines in June with regard to the applicability of the newly introduced section 194R in the Income Tax Act, the banking sector had specific concerns with regard to their businesses and operations.

Bank representatives had recently made a representation to the CBDT, seeking a clarification on the contours and the scope of section 194R as they apprehend that the recently introduced provision in the Budget will force them to deduct a 10 per cent tax at source on incentives extended to business customers through credit cards and on loans waived through onetime settlement or similar schemes.

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