TDS ON DEALER SUBVENTION CHARGES PAID TO BAJAJ FIN
This query is : Resolved
Quick Summary
25 April 2022
what is the accounting proceedure for accounting subvention income invoice received from bajaj finance ltd to a dealer dealing in electronis?is TDS u/s 194h is applicable while remitting by the dealer to bajaj finance limited?
25 April 2022
If the dealer subvention charges are in the form of commission, then TDS will be applicable u/s 194H @5%.
Not applicable in the case of individuals and HUF who were not liable to audit in the previous FY.
Not applicable in the case of individuals and HUF who were not liable to audit in the previous FY.
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05 August 2022
is there any caselaw which define the subvention as commission or contract or anything?
27 July 2025
Regarding **TDS on Dealer Subvention Charges paid to Bajaj Finance**:
1. **Accounting Procedure:**
* When the dealer receives a subvention invoice from Bajaj Finance, it should be recorded as **"Subvention Income" or "Commission Income"** in the books.
* The amount can be credited to the income account (e.g., Commission Received or Dealer Subvention Income).
* If TDS is deducted by the dealer on this income, then it will be recorded as TDS Receivable (or Advance Tax).
2. **Applicability of TDS under Section 194H:**
* Subvention charges paid to Bajaj Finance can be treated as **commission**.
* Therefore, TDS under **Section 194H @ 5%** is applicable on the payment made by the dealer to Bajaj Finance Limited.
* However, TDS deduction is **not applicable** if the dealer is an individual or HUF who is **not liable for audit** under Income Tax Act in the previous financial year.
3. **On Case Law / Definition:**
* There is no direct, widely-cited case law specifically defining "subvention" as commission or contract.
* Generally, **subvention is considered as an incentive or commission-like payment** given by the financier to the dealer for facilitating finance or sales.
* In absence of explicit rulings, the nature of subvention is interpreted based on the terms of the agreement and the nature of services rendered.
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1. **Accounting Procedure:**
* When the dealer receives a subvention invoice from Bajaj Finance, it should be recorded as **"Subvention Income" or "Commission Income"** in the books.
* The amount can be credited to the income account (e.g., Commission Received or Dealer Subvention Income).
* If TDS is deducted by the dealer on this income, then it will be recorded as TDS Receivable (or Advance Tax).
2. **Applicability of TDS under Section 194H:**
* Subvention charges paid to Bajaj Finance can be treated as **commission**.
* Therefore, TDS under **Section 194H @ 5%** is applicable on the payment made by the dealer to Bajaj Finance Limited.
* However, TDS deduction is **not applicable** if the dealer is an individual or HUF who is **not liable for audit** under Income Tax Act in the previous financial year.
3. **On Case Law / Definition:**
* There is no direct, widely-cited case law specifically defining "subvention" as commission or contract.
* Generally, **subvention is considered as an incentive or commission-like payment** given by the financier to the dealer for facilitating finance or sales.
* In absence of explicit rulings, the nature of subvention is interpreted based on the terms of the agreement and the nature of services rendered.
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