TDS on Commission

This query is : Resolved

Sanjay Govil (Querist)
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24 July 2008 Hi,

We have appointed a company as an agent to sell our products on our behalf.

The agent will collect the money from the customers, deduct commission due to it from the same, and send the balance amount to us.

Our problem is, how do we deduct TDS u/s 194H as we are receiving only the net amount and are not making any payment to the agent?

Regards

Sanjay

CA RAMESH KUMAR AHUJA

CA RAMESH KUMAR AHUJA (Expert)
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24 July 2008 WE has neither paid nor credited the amount of commission to the party. It is only the the company which has retained the amount. As and when the bills for the same are received and booked as expense by crediting the same to co's a/c, the tax at source is to be deducted. This will be the date of deduction of TDS.

Sanjeev Kumar Varshney

Sanjeev Kumar Varshney (Expert)
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24 July 2008 Dear Sanajy

How will you account for the difference of payments ? Obviously it is commission. You should insist your agent company to raise separate bill for its commission and deposit entire amount as payment received from Customers. It is the best solution otherwise you will be in default for not deducting TDS. For its security of payment you can wotk out some mechanism with mutual agreement.

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