Tax liability

This query is : Resolved

rao girwar singh (Querist)
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20 October 2012 Our 1 client dealing in garments company. They are going to provide promotional scheme. The minimum purchase is Rs.10000 for becoming promotional participant and when the 500 customers comes under this scheme till new year scheme will open. After that 50 customers will get 100% purchase amount return. Whether cash return is justified through DD or cheque ? Under lottery scheme TDS liability has to be arised ? or Cash payment not prohibited under lottery scheme? For this scheme any license is being required ?

Soumitra Basu

Soumitra Basu (Expert)
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21 October 2012 IT IS NOT A LOTTERY. IT IS JUST A DISCOUNT/REBATE OF THE SUCCESSFUL CUSTOMER. YES CASH PAYMENT IS PROHIBITED BEYOND THE CEILING LIMIT. NO TDS SHALL BE ATTRACTED. MOREOVER, IT HAS ALREADY BEEN DECIDED THAT IF THE PAYMENT IS MADE WITHINT THE FINANCIAL YEAR NO DISALLOWANCE SHALL BE MADE UNDER SECTION 40(A)(ia).