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Tds on third party salary

Andrew (na) (26 Points)

22 October 2015

Dear Sir

We had a contract with a XYZ company for paying their salesman salary.

A salary = 10000

B salary 12000

C salary 15000

and so on ......

and we charge a amount of rs 10000 for these payment

Example .Total Amount 190000 +10000 = 200000 + ST

WE ALSO DEDUCT AND PAY ...PROFESSIONAL TAX FOR THESE SALESMAN

Please let me know the TDS will be deducted on whole invoice which include salary or only on our commission part

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14 Replies

Vipin Jain (Article and own practice) (22 Points)
Replied 22 October 2015

I think Tds should be deducted on salary and commission both

NAVEESH DHAR (ADVOCATE- TAXATION ADVISOR) (427 Points)
Replied 22 October 2015

Yes TDS is to be deducted on whole amount @ 2% for company and @ 1% for other than company

Karthik.V.Kulkarni (Chartered Accountant) (594 Points)
Replied 23 October 2015

Are you paying salary? Is it salary? Are you employer of the said people then you need to deduct tds u/s 192 as you are the employer. As far as commission isnt it your receipt? If it is your receipt then you need not worry About tds. Pls reply to my question so i can be bit more clear. Please mention the detail.

Raju Suthar (Article assistance) (36 Points)
Replied 23 October 2015

why 2% . can u pls further explain?

CMA Sushant Telkikar (-) (259 Points)
Replied 23 October 2015

Whether you receive bill for same from xyz, then deduct tds on same under 94C i.e. contract but if do not receive then 94h i.e commission. As per my opinion, 192 is not applicable at all because these employees are under that companies payroll

vishak (accounts) (488 Points)
Replied 23 October 2015

I think this is not salary

Rahul Verma (Account executive) (37 Points)
Replied 23 October 2015

TDS is applicable for gross value of Invoice ( salary component and commission ) @ 10 % under 194 J because as per the mention details people are marketing professional skill ( not the untrained people )..

RAHULSMITTAL (Partner, V Mittal & Co) (252 Points)
Replied 24 October 2015

First if you are working as individual or huf, it is a case of reverse mechanism for service tax. Secondly, saleman salaey is inclusive of marketing expenses which are basically reimbusement only. TDS is to be deducted on the salaries paid which is total amount paid minus reimbursement of expense. Refer TDS on salaries for more details. I guess there is no need to deduct and pay professional fees in your case

VIPINKUMAR K TIWARI (Financial Professional) (196 Points)
Replied 24 October 2015

Service Provider have nature of transaction is contract.

I agree with Naveesh.

Andrew (na) (26 Points)
Replied 24 October 2015

Sir my work is just a salary distribution work... I take the payment via chq and add up a margin of 10000 and distribute the salary to them... They are not on my payroll nor the xyz company. The salary amount is 12000,11000 so how the TDS will affect

Andrew (na) (26 Points)
Replied 24 October 2015

Sales man.. Working in big bazzar... More, Croma, mega mart.. Etc

Bala Pullaiah B (Salaried) (179 Points)
Replied 24 October 2015

In your question, I understood it is re-imbursement of their salary.

To treat it as salary, there should be employer and employee relationship. then only this will attract. Other wise It will fall in other sections like 194J/194C. To determine the section, we need to examine the contract between your service provider and you.

And in you your example 190000 + ST. = 200000. This shows that you are highering the man power services from the service provider. Hence It may fall under the 194C.

If in your contract, If you are giving any specific job like marketing, then it will fall under 194J. (Professional and Consultancy services). Based on your contract, deductability changes.

Bala Pullaiah B

Rahul Verma (Account executive) (37 Points)
Replied 24 October 2015

I agreed with the Bala Sir. Skills and nature of job matter while deducting the TDS on bill. Suppose If we can take an example of security services which also similar to the same case but the the manpower supply by security services does not require any skills. but in case of marketing people are trained to achieve the target since the TDS section is 94J.

regrards/Rahul Verma

Arun Sharma (B.Com) (22 Points)
Replied 26 October 2015

As per section 94C TDS will be deducted because you have contract with xyz company and TDS amount to be deducted rs 20000 on your basic invoice value of 200000