TDS on compensation paid for cancellation of an agreement

[tailor jaffrulla khan]

Whether TDS is applicable on compensation paid for cancellation of an agreement to sell.

AI Summary

TDS Applicability on Compensation for Sale Agreement Cancellation Depends on Transaction Nature and Liability Factors A query was raised regarding the applicability of Tax Deducted at Source (TDS) on compensation paid for the cancellation of a sale agreement. The response indicated that the applicability of TDS depends on the nature of the transaction and the reasons for contract cancellation. Factors such as whether the contract is a works contract and who is liable for the compensation are crucial. While there is no specific category for TDS on compensation, if the compensation falls under a category where TDS is applicable, it must be deducted.