tds - sec 194h & other

[Guest]

SIR

WE ARE CO. ASSESSEE & ENTERED INTO AN AGREEMENT WITH XYZ AGENT WHO WILL ACT AS CARETAKER , BRING US THE ORDERS , ACQURE BUSINESS & OTHER SERVICES.

ON SALE HE IS GIVEN A FIXED COMMISSION . THE AGENT PROVIDE US WITH 2 BILLS

1. OF SERVICE CHARGES - 40% OF COMMISSION

2. OF REIMBURSEMENT OF EXP. - 60% OF COMMISSION

NOW WE DEDUCT TDS ON 40% OF COMMISSION BUT WHAT ABOUT THE REIMBURSEMENT .ARE WE LIABLE TO DEDUCT TDS ON SUCH REIMBURSEMENT..

ALSO GUIDE WHETHER WE ARE LIABLE TO PAY TDS IF AGENT HAS DONE ABOVE EXP.OF WHATSOEVER NATURE LIKE MARKETING , CONVEYANCE ETC. WHICH WILL BE REIMBURSED BY US AS THE ULTIMATE EXP. BEARER IS PRINCIPAL.

[Guest]

As per the recent SC cases, commission arises only if there is principal agent relationship. In your case I do not see any principal agent relationship. Hence there is no commission. So TDS u/s 194h is not deductible.

We will have to examine whether TDS is deductible u/s 194C or not?

CA. Sunil G Ingale

Mobile: 09850058855

 

AI Summary

Commission characterisation affects TDS obligations: reimbursements may not attract withholding if no principal-agent relationship. Whether TDS must be deducted on amounts labelled as reimbursements to an agent depends on whether the payments are characterised as commission arising from a principal-agent relationship; if no such relationship exists the amounts are not commission for withholding purposes and the payer must consider other withholding categories based on the substantive nature of the payments.