Tds - Applicability of Nill rate

[Rahul Bagaria]

We have received NIL tax exemption certificate from Vendor X. Vendor X wants the money due to him to be paid to Mr.Y on his account. Will Nil rate of TDS will be attracted for making payment to Mr.Y also.

yes, you neednot deduct any tax for payment to Mr.Y since you are only paying on behlaf of Mr.x

you need not deduct any tax since you are paying only on behalf of Mr.X

[Markesh Antony]

The amount paid to Y is only on behalf of X. Actual you are discharging your liability towards X by making payment to Y on his behalf. TDS is liable to be deducted on the expense of a particular nature. Therefore, no TDS is liable to be deducted.

AI Summary

Nil TDS certificate applicability: payments made on behalf of the certificate-holder to third parties remain exempt from TDS.
Where a payer discharges its liability to a nil-TDS-certificate holder by paying a third party at that holder's direction, the payment is treated as made on behalf of the certificate-holder and the Nil TDS Certificate exemption applies, so the payer need not deduct tax at source; the TDS obligation follows the nature of the payment as attributable to the certificate-holder, not the fact of disbursal to a third party.