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Payment to third party

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This query is : Resolved

CA Hemlata Saini (Querist)
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06 August 2010 Any1 please tell me Income Tax implication regarding Payment to third party.
Like Company purchased material from Party 1 but made payment to Party 2. party 1 is our creditor and Party 2 is the creditor of Party 1.
Is any income tax implication arises.
If, yes then what the solution any thing in written on letterhead can be taken from party 1.

Please reply soon.

It's very Urgent!

VINOD ARORA

VINOD ARORA (Expert)
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06 August 2010 Payments may be made on behalf of creditors to third party suppliers/contractors to expedite the business and there is nothing wrong if the same is done in writing with request/consent of both parties in writing.

However while doing payment you have to withold taxes as may be applicable to your direct supplier and accounting also to be made/routed thru direct supplier's account. Only net amount cheque may be issued to third party as on behalf payment.

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