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Tds applicability on advance payment

Abhishek Arora (Student CA Final ) (43 Points)

12 August 2016

Dear professionals,

I have paid advance to the vendor for purchase of gifts of Rs 150000. The Total value of the gift is about 300,000. This amount of 300,000 also include Goods and courier charges to my client.

Please advice me about

{i}whether the TDS should be deducted on the advance payment made to the vendor ???

{ii} At what rate TDS should be deducted?

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3 Replies

Dhirajlal Rambhia (SEO Sai Gr. Hosp.) (160322 Points)
Replied 12 August 2016

For cash purchase, for more than 2 lakh amount seller will deduct TDS u/s.206 (1d), and not you.

suresh (proprietor) (425 Points)
Replied 12 August 2016

Please specify your question is related to TDS on payments made in cash? or its related to purhcase of some items to claim as deduction under the head gifts as deduction from business income.

satish kumar Chauhan (accountant) (344 Points)
Replied 13 August 2016

TDS is aplicable on gtting the service but in your case this is purchase transaction. if you make the any payment against this transaction in cash than seller will collect TCS 1% on cash payment only and if you make the whole payment through bank than no TCS collected by seller.

Thanks