TDS

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This query is : Resolved

CA Manoj Sahu (Querist)

22 October 2009 Dear Sir,

Here is the one query regarding TDS which is described as under.

ABC Ltd Company-->XYZ Ltd Transport Company-->Mr. A Commision Agent-->Mr. B Vehicle owner..

ABC Ltd. places a order to XYZ Ltd for transports of goods but XYZ Ltd has not vehicle at present so he calls upon Mr. A, commision agent for transport vehicle. Now Mr. A finds out Mr.B truck owner and tell him to deliver the goods.

Mr. A receives payment from XYZ Ltd. and retains a verying proportion of commision and remaining amount pays to Mr. B.

Now the question is whether Mr. A is required to deducte TDS on the payment made to Mr.B ?

chetan soni

chetan soni (Expert)

22 October 2009 If Mr.A has tax audit then he needs to deduct the tds on transport charges paid to Mr. B provided the amount of payment exceeds the limits of sec. 194C.

Basically to deduct the TDS is ABC Ltd responsibility but now this is a chain transaction so the provisions apply accordingly.

There is one more way for accounting in the books of Mr. A, that is booked the commission part only as income rest all cr. to Mr. B's account & then payment done to Mr. B dr. to Mr.B's account accordingly. Due to this the payment to Mr. B does not route through the profit & loss account & then applicability of TDS provisions does not arise.

CA SANJAY MUKHERJEE

CA SANJAY MUKHERJEE (Expert)

22 October 2009 Since Mr. A is an individual he is not supposed to deduct Tax unless his books are required to be audited under section 44AB.

Even if he is under TAX audit and Mr. B submit his PAN to A then Tax need not to be deducted at source.

If B fails to show PAN then A has to deduct tax @ 1% ( assuming B is also an individual ) till 31.03.2010 and wef 01.04.2010 @ 20 % if at that time also no PAN is produced by B.

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