TDS & BILL DISCOUNTING

Tax queries 1222 views 3 replies

Assessee

advocate

108 Points Joined October 2007

here we are not cheque discounting but bill discounting and as per latest judgement in case of of Kanha Vanaspati Ltd..v.Additional Commissioner of Income-tax, Range-50, New Delhi, it has been stated that TDS is applicable on bill discounting bcoz it is interest in indirect form it is different matter u called by whatever name either financial charge, bill discounting, service charge but it is eligible for tds u/s.194A

i am discounting my bill of Rs. 50,00,000/- thru a private party mr.A and he is deducting Rs.50,000/- as a bill discounting and send me a Cheque of Rs. 49,50,000/- should i require to deduct tax u/s. 194A on rs. 50,000/- whether it covers under definition of Interest ?

Replies (3)

Nitin V Sawant

Tax Consultant

42 Points Joined November 2007

Yes, tds applicable u/sec 194A on interest paid on bill discouting from private party only.

Assessee

advocate

108 Points Joined October 2007

we are not directly paying any interest but financer party after deducting interest part in form of bill discounting, paying us remaining amount so my question in that situation how can i deduct tax and pay in govt. ? in that situation tds will be appicable ?

Abhinav Pandey

Executive-Accounts

94 Points Joined July 2010

In such discounting case there is concept of POD cheques which are redeemed after collection from actual party at that time settlement actual happened beween discouting party and you...so the whatever chaeges will be applied by discounting party will be liable to deduction for TDS u/s 194A