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.

[Guest]

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

[Guest]

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.