Free gifts to dealers

This query is : Resolved

Pankaj Jhawar (Querist)
Follow

12 April 2012 FACTS

The company comes out with a scheme every year wherein the dealers of the company are awarded with some gifts (in kinds like gold chain, Europe trip, i-pad etc) upon some achievement of sales criteria as fixed by the company. The schemes are circulated to the dealers well before the period of the scheme. The said expenses are booked by the company under the head “Business Promotion Expenses”.

QUERY

Whether the company is liable to deduct TDS on the above gifts?

Whether these gifts are taxable in the hands of the dealer?

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
Follow

12 April 2012 These are allowable as business expenses.
a) i think the company need not deduct TDS on such expenses because it is like turnover Discount and no TDS prescribed on discounts. But i am not sure this my opinion only so wait for some other experts decision or suggestion.

b) No doubt these are taxable in the hands of dealer as discount received or Under the head income from other sources choice is their but the first option is appropriate to this case.
OM SAI SRI SAI JAI JAI SAI

CA Kishore Tallam

CA Kishore Tallam (Expert)
Follow

12 April 2012 No. Gifts given to dealers are not subjected to TDS since they are not winnings from lotteries.
Yes. The gift received by the dealers are subjected to tax under B/P

You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now