Tds query on payment to apmc brokers

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

09 December 2013 Situation:
Seller-Farmer
Agent-APMC Brokers
Purchaser-Trader Concern

Now farmer comes to APMC and APMC brokers bid on behalf of farmer and Goods sales has been made to trading concern. Following Payment Illustration is arises at the time when trading concern make payment.
Value of Goods=Rs.100000
APMC Cess Fee=Rs.1000
Labour Charges=Rs.600
Broker's Commission=Rs.1000
Gross Total=Rs.102600
VAT @ 5% on Gross Total=Rs.5130
NET Amt payable=Rs.107730

Now when trading concern pay total Rs.107730 to APMC broker then there is any requirement to deduct TDS on brokerage RS.1000 charged in bill amount by broker??

Trading Concern pays full bill amount of Rs.107730 to APMC broker and not makes any individual brokerage payment.

Please suggest.
Thanks in advance.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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09 December 2013 107730/ constitutes the purchase price for the purchasing broker.
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In my view, the seller is raising a sales bill. It is not the bill for commission. The separate column of commission and goods value is prescribed to ascertain and verify the price at which bids were actually made.
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So in such a case TDS is not required to be deducted.

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CA PARAS BAFNA

CA PARAS BAFNA (Expert)
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09 December 2013 Also apply the following tests-
1. The most deciding factor is ownership and risk of the goods. If ownership of goods passes from the farmer to farmer's broker and from farmer's broker to the purchasing broker, then the transaction is treated as of a purchase-sale transaction.
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2. In case 107730/- is not paid by the party, who is going to suffer? Farmer's broker or the farmer ?
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As I understand the Broker has to make the payment to the farmer irrespective of the fact whether he receives payment from the party. If it's so, then there is no requirement of TDS. As risk and property in goods is deemed to be held by the broker.

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However, if the party does not make the payment, and broker does not own any responsibility in this regard, then it becomes a pure commission transaction on which TDs is required to be deducted.
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