TDS ON PAYMENT MADE TO PARTNER
This query is : Resolved
26 May 2022
A partnership firm, which is a government contractor has sub-let work to one of its partners. The firm has also paid interest on this contract account dues. Is TDS applicable for the sub-let work and Interest payments made to the partner.
28 May 2022
Yes, TDS is to be deducted u/s 194C (SubContractor).
w.r.t. Interest on Delay payment - interest on delayed payment is compensatory in nature and does not get covered under the definition of interest as provided under section 2(28A) of the Act, thus no TDS is to be deducted. (refer: ITO v. Parag Mahasukhlal Shah [2011] 46 SOT 302 (Ahmedabad Tribunal), Shree Venkatesh Paper Agencies (Hyd.) (Pvt.) Ltd. v. DCIT)
Hope this resolves your query!
w.r.t. Interest on Delay payment - interest on delayed payment is compensatory in nature and does not get covered under the definition of interest as provided under section 2(28A) of the Act, thus no TDS is to be deducted. (refer: ITO v. Parag Mahasukhlal Shah [2011] 46 SOT 302 (Ahmedabad Tribunal), Shree Venkatesh Paper Agencies (Hyd.) (Pvt.) Ltd. v. DCIT)
Hope this resolves your query!
31 May 2022
Very precise. Thank you sir !
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