TDS applicability on reimbursement made to dealers for business promotion

[avinash chauhan]

dear all,

A Co. X is making reimbursement to dealers who are paying to 3 rd party on behalf of the Co. X, Co. X is not deducting tax at source on he reimbursement made to the dealers on the basis that the payment made is purely an reimbursement in nature, the dealers are raising seperate bill against the co.X for rendering the above service & charging ST on the same and different bill for reimbursement,

My querry is whether TDS is applicable on the reimburement made to the dealers and if on what basis, please JUSTIFY  with any CASE LAW or any PROVISION

Regards

Avinash C

[ankit ahuja]

NO TDS IS NOT LIABLE TO BE DEDUCTED ON REIMBUSEMENT OF EXCISE DUTY. AS THE TDS IS ONLY BE DEDUCTED WHEN SOME INCOME IS GENERATED.

IN YOUR CASE THERE IS NO INCOME ON REIMBURSEMENT OF EXCISE DUTY, SO NO TDS IS TO BE DEDUCTED. YOU HAVE TO DEDUCT THE TDS ONLY ON THE CHARGES YOU RECEIVE FOR SERVICE RENDERED.

AI Summary

TDS applicability on reimbursements: pass through reimbursements are not subject to deduction; only service charges attract TDS. Whether TDS is required on reimbursements to dealers who pay third parties on the company's behalf. Reimbursements that merely pass through amounts paid to third parties (including excise duty) are not treated as income and do not attract TDS; TDS is required only on amounts that represent service charges or remuneration for services rendered.