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Tds or not

Mihir (Wealth Manager) (5293 Points)

22 March 2013

A company hired professionals for a specific work - not on salary, and the total payment shall be more than Rs. 30,000 aggregate per person in a year. The person does not want the company to deduct TDS u/s 194J. He has PAN and comes under 10% tax slab but does not file returns because most of his income is in cash. He wants the company to pay in cash Rs. 19,000/- each day for a few days instead of one cheque payment to settle the dues. Can the company pay in cash more than Rs. 30,000 aggregate without deducting TDS? Is there any other way where payment can be made without deducting TDS? Will the cash expenses be allowed?

Thanks.

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9 Replies

Asif Khan (Taxation executive) (410 Points)
Replied 22 March 2013

You have to Deduct TDS. If you fail to deduct than the cash expenses will be disallowed.

(Guest)

You have to Deduct TDS...

CA Prashant Gupta (DGM (F & A)) (14068 Points)
Replied 22 March 2013

TDS u/s 194J

there is no effect on TDS if it is paid in cash or in cheque

for saving TDS you can get bill in two names, so amount go below 30000/-

otherwise if TDS is not deducted whole expense will be disallowed whether in cash or in cheque

1 Like

Mihir (Wealth Manager) (5293 Points)
Replied 22 March 2013

Ok, thank you all.

venkatesh (CA) (137 Points)
Replied 23 March 2013

I agree with prashant's opinion,

Ramanuj (Accountant.) (834 Points)
Replied 23 March 2013

Agree with Mr Gupta ji Its is right way.

CA.Ravi Kant Teltia, CS, CWA (Chartered Accountant) (49 Points)
Replied 23 March 2013

Dear All

Pls analysis below opinion, if it is right:

Receive one Invoice for reimbursement of Travelling exp. amounting to Rs. 11000/- & second bill for professional services amounting to Rs. 19000/-, so that TDS will not be attracted.

Ravi Kant Teltia

Ganeshbabu K (Audit and Tax Advisory) (48559 Points)
Replied 24 March 2013

TDS WILL ATTRACT ONLY IF TOTAL CREDITS IN FINANCIAL YEAR FOR A PARTICLUAR PART EXCEEDS 75000 IN A YEAR OR SINGLE PAYMENT EXCEEDING 30000 IN A DAY..

SO AS PAYMENT OF CASH MORE THAN 20000 IS DISALLOWED SO

YOU CAN PAY LESS THAN 20,000 TO THAT PERSON PROVIDED TOTAL PAYMENTS NOT EXCEEDING 75000,

ONCE IT EXCEEDS 75000 YOU NEEDS TO DEDUCT TAX ON TOTAL AMOUNT CREDIT IN THAT FINANCIAL YEAR...

CA Deepak Rathore (EXPERT) (281 Points)
Replied 24 March 2013

dear all

there is no Rs 75000/- limit incase of 194J it is Rs 30000.

Secondly Tds not deducted on Reimbursement. n ITO Vs. Dr. ITO Vs. Dr. Willmar Schwabe India (P) Ltd. [2005] 3 Willmar Schwabe India (P) Ltd. [2005] 3 on the

subject of deduction of tax at source on expenses reimbursement and

upon perusal of the same, held that reimbursement of expenses for

which bill is separately raised did not attract the provisions of Section

194J. Accordingly, no TDS is required to be deducted on o TDS is required to be deducted on o TDS is required to be deducted on such

reimbursement reimbursement of expenses of expenses of expenses.

Dear mihir

in Your case

Since you have made cash payment

u can disclose different name in narration and divide entry of Rs 4000/3000/5000

so that no one can make doubt in ur entry

Generally no one see small entry.

I have already done this in my client case but it depend ur volume of ur Entry.