TDS on incentives

[KRISHNAMURTHY S P]

Company having dealers all over india, supply goods to dealers under a contract of sale. If the dealer achieves the turnover target, company provide certain incentives like, salary reimbursment of some of the employees, advertisment cost etc. Is the company liable to deduct tax on these incentive given to dealers.

AI Summary

Incentives to Dealers: TDS Applicable if Classified as Commission, Not Required if Considered Discounts Under Tax Rules. A company provides incentives to dealers across India who meet certain sales targets, such as reimbursement of employee salaries and advertising costs. The query raised concerns whether tax should be deducted at source (TDS) on these incentives. The response clarified that if the incentives are classified as brokerage or commission, TDS must be deducted. However, if they are considered discounts, no TDS is required. The opinion given suggests that since dealers act as independent distributors, these incentives are likely discounts, thus not subject to TDS.