Loan waiver not a benefit, banks exempt from 10% TDS on OTS: CBDT clarifies

The Central Board of Direct Tax has clarified in a circular that the banks are not required to deduct 10% TDS on one-time settlement (OTS) or loan waivers.

The Central Board of Direct Tax (CBDT) has clarified in a circular that the banks are not required to deduct 10 per cent TDS on one-time settlement (OTS) or loan waivers.

CBDT said OTS on loan waiver by a bank will not be treated as a benefit or a perquisite and not face Tax Deduction at Source (TDS) as they would have to bear the additional cost of tax deduction along with the haircut.

"It is true that waiver or settlement of loan by the bank may be an income to the person who had taken the loan. It is