Tax deducted at source

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

10 December 2014 Trader of Power, Sales the Electricity to a Limited Co.
Now, with selling electricity the Trader charges the Trading Margin in Invoice.

My query is whether TDS will be applicable on Trading Margin amount or not ?

If Yes then under which section or No then Why.

All experts are requested to give advice as soon as possible please.

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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10 December 2014 no tds is applicable on sale items.

Message likes : 1 times

Querist : Anonymous

Querist : Anonymous (Querist)

11 December 2014 Require more suggestion

CS,CA F,Numrologi TusharSampat

CS,CA F,Numrologi TusharSampat (Expert)
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12 December 2014 since electricity is a goods hence no tds is applicable u/s 192-196D of it act

Querist : Anonymous

Querist : Anonymous (Querist)

13 December 2014 Thank you Mr. Tushar for suggesting, but still i am not come to the solution because here i am talking about Trade Charges not Electricity Charges.

So, TDS is applicable on Trade Charges or not ?????

Aashok Kumar Sharma

Aashok Kumar Sharma (Expert)
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26 July 2025 Got it! Your question is about **TDS on the Trading Margin charged separately** on electricity sale, not on the sale price of electricity itself.

Here’s the clarification:

* **Sale of goods (like electricity)** — no TDS is applicable on the sale value itself.
* But **Trading Margin is a service/commission/fee** charged over and above the cost price. This is NOT sale of goods, it’s a kind of service income.

**So, is TDS applicable on Trading Margin?**

* Yes, **TDS can be applicable on the trading margin**, because it is a service income.
* The relevant sections could be:

* **Section 194C** if it’s treated as payment to contractor.
* **Section 194J** if it’s treated as professional or technical services.
* Or **Section 194H** if treated as commission or brokerage.

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**Which section applies depends on the nature of the agreement:**

* If Trading Margin is a **commission or brokerage**, then **Section 194H** applies (TDS @ 5%).
* If it is a **contractor/service provider payment**, then **Section 194C** applies.
* If it’s for **professional services**, then **Section 194J** applies.

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### Practical approach:

* If the trading margin is like a commission or brokerage on the sale of electricity, **Section 194H (TDS on commission @ 5%)** is the closest fit.
* So you **should deduct TDS on the Trading Margin amount under Section 194H**.

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