Tax experts confirm that Merchant Discount Rate (MDR) fees can be treated as tax-deductible business expenses under Section 34 of the Income Tax Act, 2025.
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Key takeaway
MDR (Merchant Discount Rate) fees are confirmed as tax-deductible business expenses under Section 34 of the Income Tax Act, 2025.
- Step 1 · The triggerTax experts confirm MDR fees are deductible business expenses under Section 34 of the Income Tax Act, 2025, lowering the after-tax cost of digital payment acceptance for Indian SMEs.
- Step 2 · Knock-onLower effective MDR cost encourages SMEs to maintain or expand digital payment acceptance, supporting transaction volumes for payment service providers and banks.
- Step 3 · Reaches youSustained digital payment volumes support fee income for banks and payment service providers, and drive continued demand for tax advisory services.
The trigger is reported by the source below. The steps that follow are Branch²’s traced reasoning — how the shock could reach a business like yours, not a prediction.
Source: The Hindu BusinessLine
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