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Is TDS applicable on gift?

Nitil Kr. Agarwala (Persuing CS) (264 Points)

08 September 2011

Respected Sir / Madam,

My company is planning to provide some gifts to its dealer & distributors as dipawali offer after they achive the given target.

My question is whether we should deduct the TDS on the same if the gift amount exceed5000/-.

If yes, such deduction shall be made under which section of IT Act.

Kindly Guide me.

Thanking You,

With regards,

Nitil Agarwala

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10 Replies

Mihir (Wealth Manager) (5293 Points)
Replied 08 September 2011

I think you can deduct TDS u/s 194H at 10%.

Let others reply.

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viral sheth (CA) (57 Points)
Replied 08 September 2011

no tds is not applicable on the person who gives the gift

but the dealer to whom gift is given would have to record the same in his books of accounts and the same shall be taxable as business income, as there is direct nexus with his profession

2 Like

Sanat kumar (Chartered Accountant) (265 Points)
Replied 08 September 2011

Hi Nitil

I think, TDS is not applicable on gift, as gift is not covered under section 192 to 195. But the gift will be taxable in dealer's hand. And the dealer have to pay advance tax or self assessment tax on that gift value.

1 Like

srinivass (CA Final) (2466 Points)
Replied 08 September 2011

Originally posted by : viral sheth
	no tds is not applicable on the person who gives the gift but the dealer to whom gift is given would have to record the same in his books of accounts and the same shall be taxable as business income, as there is direct nexus with his profession

1 Like

CA PRAVEEN SINGH (MANAGER ACCOUNTS) (2277 Points)
Replied 09 September 2011

NO TDS IS TO BE DEDUCTED...

UNDER WHICH SECTION IT IS TO BE COVER,REALLY NOT....U/S 192 TO ,195

BUT IT WILL BE TAXABLE BUSINESS INCOME OF RECEIVER....

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pavani (practicing chartered accountant) (74 Points)
Replied 12 September 2011

no tds is applicable but the dealer has to book it as income and pay tax

CA Pallav Singhania (IT System Auditor) (33262 Points)
Replied 12 September 2011

if an employer is providing gift more than value of rs 10000 is taxable....in the hands of employee the employer required to deduct the TDS....in other case the burden still on the dealers head....

VISHNU HARIT (Assistant manager (management trainee)) (59 Points)
Replied 14 September 2011

I am agree with all of gentlemen who think that TDS on gift will not be applicable.bcz there is no refrence of GIFT in sections 192 to 195 which are related to TDS.

The value of gift will be added to the profit & gains of business bcz it is directly related to business.

CA Bada Sanjay Kumar Reddy (CA) (69 Points)
Replied 17 September 2011

it is business promotion expenses (gift in kind). It is not covered under TDS provisions., TDS provisions covers only Winnings such as cross word puzzles, games, horce races etc. which does not anywhere cover gifts. So it is not reqd. from the view pt. of the company to deduct Tds. But the same amount received by an individual should be taken into consideration regarding whether it is taxable under salaries, business or profession or other sources. (which is not so clear in the question)