t.d.s. on deduction of expenes

This query is : Resolved

Ravindranathan (Querist)
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26 May 2011 Firm "A" deduct from the bill of Firm "B" the expenses paid on behalf of Firm "B". What is the amount on which the t.d.s. to be deducted.

Eg. Firm "A" paid Rs.50,000/- towards prof. chgs. on account of "B". When "B" raised a bill for expenses of Rs.2,00,000/"A" deducted Rs.50,000/- and paid balance Rs.1,50,000/-

Clarification is solicited on :

1. Whether the t.d.s. to be deducted on Rs.2,00,000/- or on Rs.1,50,000/- Pl give reason why tds on Rs.2,00,000/-/Rs.1,50,000/-

2. whether the recovery of Rs.50,000/- will fall in the category of reimbursement of expenses in the hands of "A"

3. Who is liable to deduct tax on Rs,50,000/- prof. fee paid.

U S Sharma

U S Sharma (Expert)
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26 May 2011 A will be liable to deduct on 50000 on the billing date of A or billing date of B whichever comes later to B and 150000 on payment date or credit date, which ever comes earlier.

B will be liable to deduct TDS on 50000 paid to A

Sanjeev Kumar Varshney

Sanjeev Kumar Varshney (Expert)
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26 May 2011 Ans 1. A will deduct the tds on rs. 200000/- (bill raised by B to A) if expenditure is in the nature of tds. further on rs. 50000/- firm B will be liable to deduct the tds @10% because a only make the payment on behalf of A and charges will be debited in the books of B.

Ans.2 yes, Rs. 50000/- will fall in the category of reiumbrement.

Ans. Firm B will liable to deduct the tds on rs. 50000/- reason i wrote in point no.1

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