Tax deducted at source
Querist : Anonymous
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.
Querist : Anonymous
Querist : Anonymous
So, TDS is applicable on Trade Charges or not ?????
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.
---
**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.
---
### 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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