Share in profit paid

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This discussion clarifies whether a 30% profit share paid to a service provider for F&O trading can be deducted as an expense, alongside brokerage. It confirms that this payment is generally deductible and addresses the relevant Tax Deducted at Source (TDS) implications, particularly for tax audit cases. The advice also states that this arrangement is not considered an unregistered oral partnership and touches upon Goods and Services Tax (GST) applicability for the service provider.

Prasad Balakrishnan

Prasad Balakrishnan (Querist)

06 August 2021 A person dealing in F&O subscribes and pays 30% profit earned in F&O to the person giving the service. Can this amount be deducted as expense along with brokerage expense. What is the impact with respect to TDS. Can it be considered a oral partnership unregistered and hence what is the impact both on direct tax and indirect tax. Kindly guide

CA R SEETHARAMAN

CA R SEETHARAMAN (Expert)

06 August 2021 This amount can be deducted as expense along with brokerage expense.
TDS applicable in tax audit cases.
It can't be considered as partnership.
GST applicable on person providing services is registered under GST.

Prasad Balakrishnan

Prasad Balakrishnan (Querist)

07 August 2021 Thank you sir for your answer.

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