My client has a real estate business, He received some advances from customers 2 years before, But now he is going to repay that advances along with some amount of compensation due to some problems, now my doubt is, Whether TDS will attract on compensation to customers ? If, yes please mention the section....
19 January 2016
Compensation paid to customers is a capital receipt in the hands of the receiver being a booking party. If the amount cannot be termed as interest then, in my view, no TDS is required to be deducted.
19 January 2016
No Tds. further read section 2(28) which define interest.. interest" means interest payable in any manner in respect of any moneys borrowed or debt incurred. The money here was not taken as loan or debt or borrowing. A Compensation, moreover, which was not predetermined and pre agreed can not be termed as interest.
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