Go Ad-Free on CAclubindia with Daily Mobile Updates. Subscribe Now!

Whether TDS applicable

Srinivasa Murthy HV (Sr. Excecutive - Accounts) (30 Points)

17 February 2010

Ours is Public Company, engaged in manufacturing of products. Our Distribution Channel consists of Distributors, Dealers and C&F Agents. Company is reimburing all the expenses incurred by the C&F Agents, Distributors, and Dealers either in the form of Credit Note or Cash/Bank Payments. At present, Company is deducting the tax at source for all the payments made to C&F Agents.

Now, my question is what ever reimbusement of expenses made to Distributors, dealrs either in the form of Credit Notes or Bank /Cash payments, will atrract TDS or Not?

Reply
Follow
Share

14 Replies

Murali Krishna (Employee) (350 Points)
Replied 18 February 2010

Originally posted by : Srinivasa Murthy HV
	Ours is Public Company, engaged in manufacturing of products. Our Distribution Channel consists of Distributors, Dealers and C&F Agents. Company is reimburing all the expenses incurred by the C&F Agents, Distributors, and Dealers either in the form of Credit Note or Cash/Bank Payments. At present, Company is deducting the tax at source for all the payments made to C&F Agents. Now, my question is what ever reimbusement of expenses made to Distributors, dealrs either in the form of Credit Notes or Bank /Cash payments, will atrract TDS or Not?

See Mr. Srinivas Murthy..!!!

As far as TDS is concerned it has to be deducted only in case of payments which is allowing the other one to earn income.

Here in your question you stated that it is only reimbursemnt to dealers, etc.., which is incurred by them for smooth flow of your business, as it is only reimbursement to the dealers it is not required to deduct TDS, if they are paying on behalf of you then it is required to deduct TDS on the third party (Not DISTRIBUTOR, DEALER, C & F AGENTS)..

Upgrade to CAclubindia Pro. Subscribe Now!

llllVICTORllll (Internal Auditor) (511 Points)
Replied 18 February 2010

MR. Murali is right. TDS should be deducted only if expense incurred by the Distributors and others on behalf of company to third party exceeds the TDS limits. and company neednot deduct TDS for reimbursement of expenses

Radhika (CA Practice ) (87 Points)
Replied 18 February 2010

If mediclaim policy has been taken by the company. An accident occured and employee has spent all payment to Hospital.

The Company receive cheque from Insurance company and paid to employee after deducting TDS. Is it correct????????

Mail to me : rakes2004 @ gmail.com

Radhika (CA Practice ) (87 Points)
Replied 18 February 2010

If mediclaim policy has been taken by the company. An accident occured and employee has spent all payment to Hospital.

The Company receive cheque from Insurance company and paid to employee after deducting TDS. Is it correct????????

Mail to me : rakes2004 @ gmail.com

Murali Krishna (Employee) (350 Points)
Replied 18 February 2010

Wat is the need to deduct TDS in that case, whatever is spent by an employee the company has reimbursed..

Upgrade to CAclubindia Pro. Subscribe Now!

Puneet (learner) (105 Points)
Replied 18 February 2010

There is no TDS on Remcursment of Expnses.

Ameet (L) (1678 Points)
Replied 18 February 2010

Radhika,

Question of TDS does not arise in u'r case at all.

Murali Krishna (Employee) (350 Points)
Replied 18 February 2010

Not onli in this case, whatever the case may be, NO TDS will attract for reimbursements..

Divya K S (CA) (289 Points)
Replied 18 February 2010

TDS can be deducted only on income. Since reimbursement is not an income, TDS will not be attracted.

CA Saurabh Shukla (Accounts Executive) (223 Points)
Replied 18 February 2010

Radika pls. ask your employer under which sec. they deduct the tax.

Mr. Srinivasa if your company deduct tax on such rembursement, in that case Govt. get Double Tax on same transaction.

So, as per me your company is not required to deduct tax..........

Upgrade to CAclubindia Pro. Subscribe Now!

CA Saurabh Shukla (Accounts Executive) (223 Points)
Replied 18 February 2010

Radika pls. ask your employer under which sec. they deduct the tax.

Mr. Srinivasa if your company deduct tax on such rembursement, in that case Govt. get Double Tax on same transaction.

So, as per me your company is not required to deduct tax..........

Rajasekaran (Article) (25 Points)
Replied 10 January 2011

Dear Friends

Still am having a doubt on deduction of TDS on reimbursement

The CBDT have come out with the circular saying that TDS in case of reimbursement made by the professionals under sec 194 J ,that TDS will not be applicable and the reimbursement is out of the purview

However , so far the CBDT have not issued any circulars incase reimbursement made by the contractors and the act says that "ANY Payment or credit made to the contractors for providing contract services" will comes under the purview of TDS u/s 194 C

like reimbursement made by the C&F agents

Kindly clarify buddy's

U S Sharma (glidor@gmail.com) (21063 Points)
Replied 10 January 2011

Originally posted by : Rajasekaran
	Dear Friends Still am having a doubt on deduction of TDS on reimbursement The CBDT have come out with the circular saying that TDS in case of reimbursement made by the professionals under sec 194 J ,that TDS will not be applicable and the reimbursement is out of the purview However , so far the CBDT have not issued any circulars incase reimbursement made by the contractors and the act says that "ANY Payment or credit made to the contractors for providing contract services" will comes under the purview of TDS u/s 194 C like reimbursement made by the C&F agents Kindly clarify buddy's

providing services and reimursement both are diff topics

if the C&F agent issued the invoices from his own firms and claimed reimursement , thenTDS applicable, but if the payements belong to any 3rd party and C&F is mere payee and claim payment from pricipal, then TDS does not arise, however if the end party payments comes in net of TDS then company may ask the C&F to deduct TDS and then only issue payment on behalf of the company.