TDS
This query is : Resolved
23 May 2011
Facts
the agreement B/w XYZ ltd. & its debtors:
XYZ ltd. will pay amount Equal to 50% of 3% of sale to debtor as business promotion expenses. ie if debtor purchases goods amounting to Rs 100000 then XYZ ltd. will pay him (50%(3/100*100000)) RS 1500.
now debtor spends lets say 10000 on business promotion & take Reimbursement of RS 1500 from XYZ ltd.
the payment is made through bank and the expenses are booked as business promotion Expenses By XYZ ltd.
whether Tax shall be deducted At source from such payment?
the agreement B/w XYZ ltd. & its debtors:
XYZ ltd. will pay amount Equal to 50% of 3% of sale to debtor as business promotion expenses. ie if debtor purchases goods amounting to Rs 100000 then XYZ ltd. will pay him (50%(3/100*100000)) RS 1500.
now debtor spends lets say 10000 on business promotion & take Reimbursement of RS 1500 from XYZ ltd.
the payment is made through bank and the expenses are booked as business promotion Expenses By XYZ ltd.
whether Tax shall be deducted At source from such payment?
24 May 2011
such expenses paid to debtors are to be treated as discount or commission, hence TDS deductible on commission
24 May 2011
Rs. 1500 is not actually an reimbursement of expenses it is a discount allowed to customer on sale of goods. Here it is not matter whether the debtors has actually made expenses or not. the percentage is fixed on sale. Hence TDS is not applicable on discount.
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