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Newly registered firm liable to deduct tds from the beginni

Damodaran (Accounts & taxation) (152 Points)

29 November 2012

I'm a newly registered service provider(advertisement agent) I'm paying commission to a broker nearly one lac per month, Whether I'm liable to deduct tds from the first payment or from the next assessment period Pls clarify, its very urgent Thanks in advance Damo

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ANJALI NEGI (Chartered Accountant) (1263 Points)
Replied 29 November 2012

Yes, you are liable to deduct TDS under section 194H of Income tax in case the payment made to broker exceeds Rs. 5000... @ 10%

As in ur case the amount is Rs 1 lac. so u need to deduct TDS @ 10% irrespective of the fact that it is the first payment..

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helo mr.damodaran answer for yours query,

person liable to deduct tax: any person (not being an individual or huf,whose accounts are NOT subject to tax audit u/s 44AB,in the preceding financial year).

category of payee: any person resident in india.

rate of deuction of tax: 10%.

no T.D.S: aggregate payment does not exceed rs.5000 during the financial year.

CONCLUSION: IF YOURS ACCOUNTS ARE SUBJECT TO TAX AUDIT U/S 44AB IN THE PRECEDING FINANCIAL YEAR YOU ARE LAIBLE TO DEDUCT TAX U/S 194H,INCOME TAX ACT,1962.

NOTE: AMOUNT ON WHICH T.D.S HAS TO BE MADE IS PAYMENT INCLUSIVE OF SERVICE.