TDS ON ADVT. COMMISSION

This query is : Resolved

lohithakshan u k (Querist)
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01 December 2007 IS THERE ANY CHANCE TO AVOID TDS ON COMMISSION AGENTS. WHETHER PAYMENT TO THEM CAN BE MADE AS INCENTIVES WHICH COMES UNDER SALARY CATEGORY. SUB BROKERAGE OF MUTUAL FUND AGENTS COMMISSION ARE EXEMPTED. A LEADING PUBLISHING CO. IS NOT COLLECTING TDS FROM THEIR AGENTS, WHO MAY BE LOW PAID AGENTS BUT COME ABOVE THE THRESHOLD LIMIT OF RS. 5000.THIS IS VIEW OF THE PAN NO REQUIREMENT OF THESE AGENTS.

CA Prasanna Krishnan V

CA Prasanna Krishnan V (Expert)
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02 December 2007 Dear Sir

If you treat the payments as Professional Charge Payments you have little larger threshold limit - ie - Rs 20000 pa. Otherwise there is no chance to legally avoid TDS.

Your 26 Q returns are very much accepted as long as they contain PAN of 70% deductees.

Even if 'No PAN cases' exceed 70% you have practical solutions to file your TDS returns and avoid disallowance Under Section 40 (a) (ia) of the Income Tax Act 1961.

K V Subba Rao

K V Subba Rao (Expert)
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03 December 2007 Similar problem is faced by Courier Companies. Thershold limit of Rs 5000 is unfortunately very low which works out to a very meagre amount of little over Rs 400 per month.

Whether it is justified or not from size or practical point of view, we have no option except to affect TDS; else we run the risk of entire expenditure being disallowed in Company's assessment.

Treating Commission as part of salary also is not an effective solution because there is scope for questions arising from different Authorities regulating ESI, PF etc. Morevoer the Agents are likely to claim employer-employee relationship before the Labour Department in due course, if we dispense with the services of any Agents for not meeting targets etc

Sooner you affect TDS, the better

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