Incentive to service provider

This query is : Open

Querist : Anonymous

Querist : Anonymous (Querist)

28 September 2015 Dear experts,
the company has given the incentive to service provider, plz let me know weather TDS will attract or not if yes how much and which section it will cover.......

regard
Anita Agarwal

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
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28 September 2015 Which kind of incentive & to which service provider, plz clarify.

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2015 Dear sir
this was the contract of repair & maintenance however the service provider has done batter work therefore the company has given rs. 35000 extra as incentive for their best performances........ plz let me know weather this extra amount is to be treat as his commission or incentive and what would be TDS applicability on this extra amount.......

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CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
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29 September 2015 Yes it will attract TDS, as there is no difference in view of income tax weather its incentive or its just quoted price. So Copmany have to deduct tds as normal. i.e. In Repair & Mainetance Contract TDS u/s 194-C will be applicable which is 1% (If the other party is individual or HUF) & 2% if the other party is other than Individual or HUF.

So Copany need to Deduct TDS u/s 194-C @ 1/2 which ever % is applicable.

Querist : Anonymous

Querist : Anonymous (Querist)

29 September 2015 Dear sir,
we have deduct the 1% TDS on contract amount as the service provider is individual, plz guide me weather this extra payment is to be add in his contract value and TDS will attract the same 1% or it will be his commission because many tax experts has opinion that this extra payment in respect of service providing is to be treat as commission. plz confirm.....

CA Mehta Ankur N.

CA Mehta Ankur N. (Expert)
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29 September 2015 Section 194H “Commission or Brokerage” specifies that
(i) any payment received or receivable, directly or indirectly by a person acting on behalf of another person for service rendered (not being professional services)
(ii) for any services in the course of buying or selling of goods
(iii) in relation to any transactions relating to any assets, valuable article or things, other than securities

so it do not fall in the above 3 so it will be 94- c & 1% only.

Its not commission in any terms friend.