tax deduction at source

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ravi agarwal (Querist)
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14 January 2008 if a payment is made to a Local Authority whether there is a need to deduct any TDS u/s194 or not. please send the reply as soon as possible.....

ravi agarwal

ravi agarwal (Querist)
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14 January 2008 reply as soon as possible

shipra walia

shipra walia (Expert)
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14 January 2008 Sec 194 is inserted in the Income Tax Act for deduction of Tax from dividends paid by an Indian Comapny or any company who has made an arrangement for paymnet of dividend in India at the rates in force.

This deduction is made from any payment made to a shareholder, therefore if that shareholder is a local authority the same will also be eligible for deduction.

However,there is a proviso that no such deduction u/s 194 shall be made in respect of any dividends if the company has paid a DDT as per sec 115O

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CA Hemant T Dewani

CA Hemant T Dewani (Expert)
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15 January 2008 local authorities are exempt from tax if the give certificate to not deduct tax then you will not deduct tax.local authorities are under state govt control and they are quasi govt bodies and not for profit making units so in my opinion tds is not to be deducted