Relation Expenditure Capital Nature to Not deducting TDS

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Typically, Tax Deducted at Source (TDS) is not applicable when purchasing capital assets, as this is not considered income for the buyer. TDS is levied on payments that constitute income for the recipient. However, TDS may be required on capital expenditure related to technical know-how or construction services if the payment exceeds the prescribed threshold limits under the Income Tax Act.

Sagar Ingle

Sagar Ingle (Querist)

04 May 2020 Why is the capital expenditure for acquiring the Assets not subjected to TDS?

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

05 May 2020 No TDS applicable on purchase of either capital or revenue assets.
TDS applicable on capital or revenue works.

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Aashok Kumar Sharma

Aashok Kumar Sharma

(Expert)

05 May 2020 The main concept behind is that TDS needs to be deducted on one's income. If we are purchasing an asset it is not an income for us. If we are paying someone which is in the nature of income to the recipient TDS needs to be deducted subject to limits and applicability as per Income Tax Act.

KAVIRAJA ADDANGADI

KAVIRAJA ADDANGADI (Expert)

05 May 2020 Capital expenditure involve technical know-how or construction of building pertain to business which involves service needs to be deducted tds if treshhold limit exceeds limit.

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