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GST and Income Tax

Vipul Acharya (Account Officer) (647 Points)

13 September 2019

Our company Paid Rs. 50 Lacs on behalf of Subsidiary to Dealers and Distributors.

What are provisions applicable on this Transaction

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6 Replies

Gunasekhar (Student CA IPC / IPCC) (51 Points)
Replied 14 September 2019

Its treated as Loan to subsidiary

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sabyasachi mukherjee (27597 Points)
Replied 14 September 2019

Vipul this has no implication on gst and income tax.
Amount paid to subsidiary is treated as loan.

Vipul Acharya (Account Officer) (647 Points)
Replied 15 September 2019

Actually our Company paid the amount against cash back scheme as incentive on sales to its dealers and distributors, the expenses belongs to Subsidiary (material sold by subsidiary) but booked in Holding books and paid from Holding.

sabyasachi mukherjee (27597 Points)
Replied 15 September 2019

It depends how you show it in your books of accounts.
But somehow expenses borne by holding company.
billing in subsidiary company.

Vipul Acharya (Account Officer) (647 Points)
Replied 15 September 2019

That's why I need guidance how to show in books

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Kapadia Pravin (17259 Points)
Replied 22 September 2019

Holding company should have paid to subsidiary and then subsidiary paying to Dealers/distributors.

What's the advantage for paying directly by Holding Co.

Is there any of TDS involved

Holding company to debit subsidiary Account for such payments and Subsidiary to debit incentive paid Account and credit to Subsidiary A/c.

please ensure companies Act provisions as far as holding subsidiary transactions are concerned.