whether factoring charges qualify as interest for applicability of tds?
i think opinion by a CA firm regarding non-applicability of TDS on factoring charges will have no impact until n unless the same has been confirmed by the IT dept.
CA. Rajat Tayal (Chartered Accountant) (64 Points)
17 September 2009whether factoring charges qualify as interest for applicability of tds?
i think opinion by a CA firm regarding non-applicability of TDS on factoring charges will have no impact until n unless the same has been confirmed by the IT dept.
CA. Rajat Tayal
(Chartered Accountant)
(64 Points)
Replied 17 September 2009
i think opinion by a CA firm regarding non applicability of TDS on factoring charges will have no impact until n unless the same has been confirmed by IT dept.?
RN123
(vp)
(21 Points)
Replied 12 August 2010
The TDS in my understanding would not be applicable. there is a basic difference between the two. Bill discounting has a nature of loan and factoring charges where the receivables are sold to the asset restructuring or a factoring company at discount. see the difference on the link given https://en.wikipedia.org/wiki/Factoring_(finance) in more details.
Further, as per the recent ruling in
ITO vs. Kanha Vanaspati Ltd. (2007) 108 TTJ 816 (
And bill discounting and factoring charges are not comparable and factoring charges in my opinion would not attract the TDS provisions.
Originally posted by : CA. Rajat Tayal | ||
whether factoring charges qualify as interest for applicability of tds? i think opinion by a CA firm regarding non-applicability of TDS on factoring charges will have no impact until n unless the same has been confirmed by the IT dept. |
Hai..............
Good morning............
Welcome to this forum.....
Benefits of TDS Commercial Business Advice and Finance's Factoring and Invoice Discounting Services include:
An Example of Invoice Finance
Company "A" imports branded clothing into the UK and sells the goods, inter alia, to 2 large high street retailers.
It receives 30 days credit from date of shipment from its overseas suppliers and the goods can be brought into the UK , delivered and invoiced to customers within 30 days.
It is selling to its UK customers on 60 days terms and needs funding against invoice in order to pay the suppliers on due dates.
The 2 large high street retailers dominate the sales ledger accounting for over 80% of Company A's turnover.
Mainstream debtor funders are generally looking for a spread of debtors in the sales ledger. Conventional Invoice Finance arrangements contain a limited high concentration clause, restricting the cash that can be advanced against the 2 largest customers in this example.
We have a Finance Company that are happy with the credit risk of the 2 major retailers and analysis of the historical trading record shows that there has been limited disputes and credit notes diluting the value of the security. The Finance House will accordingly fund the full amount of the debt and the requisite funding to Company A to pay its suppliers on the due dates.
Have a nice day......
Thank you for sharing with us.....
regards ,
phe9oxis.
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