25 February 2008
A company had entered into a contract with one security agency for security service. The company is regular in paying the monthly charges after deducting TDS. After 4 months the security agency failed to pay salary to security personnel hence the company had terminated the agreement with agency and gave direct cash payment to security personnel(4 nos). One of the security collects the entire amount and distributed the amount to others. Monthly payment to all of them aggregates to Rs.12900. Whether the company is liable to deduct TDS on such payment to the security personnel???
25 February 2008
YES NOW SINCE THE CONTRACT IS NOW BETWEEN THE SECURITY PERSONS AND COMPANY,THOUGH THE CONTRACT MAY BE VERBAL/ORAL BUT THE COMPANY IS LIABLE TO DEDUCT TDS U/S 194C
25 February 2008
But from whom the company must deduct tax? Is it from the person who collects the amount on behalf of others?? In whose name the company may issue TDS certificate?? If the co issues TDS certificate in the name of the person collecting the amount, is he having an unfair advantage of TDS claim. Actually the whole income is not his. But he can claim the TDS amount fully. Is it allowable??
25 February 2008
It is from the person who has assumed the role of contractor, from payment made to him in a consolidated form. Why should you think it is unfair? It is the money due to him and you have deducted it and paid into the Govt.
25 February 2008
IF YOU DEDUCT THE TDS FROM CONSOLIDATED AMOUNT AND THEY AGREE SO WHAT IS THE PROBLEM, YOU CAN ISSUE TDS CERTIFICATE IN THE NAME OF ONE PERSON.IT IS UPTO THEM ,IF THEY ALLT OGHETHER DO NOT HAVE ANY OBJECTION THERE IS NO PROBLEMAND YOU HAVE TO DO NOTHING WITH UNFAIR ADVANTAGE HE IS GETTING
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