TDS ON Commission / Brokerage

This query is : Resolved

Samir Saraiya (Querist)
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14 May 2009 An assessee sells sugar on the Commodity Exchange and the transaction is finally settled by delivery.The assessee get the sale consideration less the brokerage/commission charged by the Broker registered with the Exchange. Is the assessee liable to deduct tax at source? If so how would the assessee deduct when he receives the money net of the brokerage and has no occasion to deduct?

taxindiaconnect

taxindiaconnect (Expert)
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14 May 2009 Please clarify that the commodity exchange is in India or abroad. Considering the exchange is situated in India, yes the seller is required to deduct TDS from the commission paid to the broker u/s 194H. IN this case the assessee has to enter an agreement with the broker to remit the amount of sales - commission + TDS to the seller company. Then the seller company can deposit the TDS with govt. Otherwise the seller will have to bear the TDS also and after grossing up the commission paid, will have to deposit the TDS

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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14 May 2009 I agree with Mr.Rajesh Dua since CBDT throgh a circular has clarified that tax needs to be deducted on above type of commission transactions.

Samir Saraiya

Samir Saraiya (Querist)
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15 May 2009 Thank you Mr Rajesh Dua and Mr Nitin Wadhwani. There is a reference to the CBDT Circular.Can you please give the citation or Number.Thanks once again

CA Nitin Wadhwani

CA Nitin Wadhwani (Expert)
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15 May 2009 The relavent circular is 619 dt.04/12/1991.

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