18 March 2014
Hello, We are a manufacturing company, we sold our products to dealers and retailers, to whom we issued post sale credit notes of volume rebate scheme (Volume based) or any target based rebate.
Is any tds will applicable on such credit note issued by us, if yes than in which catagory it will falls.
27 July 2025
Regarding **TDS on Post-Sale Rebate (Credit Notes)** such as volume rebate or target-based rebate issued to dealers/retailers, here’s the clarification:
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### 1. **Nature of Transaction**
* Post-sale rebates or volume-based rebates are **adjustments in the sale price**. * They are reductions in the amount receivable from the dealer/retailer against earlier sales. * These are essentially **price adjustments or discounts** granted after the sale.
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### 2. **Is TDS Applicable on Rebate?**
* **No TDS is required to be deducted on post-sale rebates or credit notes** given to dealers/retailers. * TDS provisions are generally applicable on **payments for services, contracts, or fees**, but not on **adjustments in sale price or discounts**. * Rebate/discount reduces the sale consideration and is not a payment attracting TDS.
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### 3. **Why No TDS?**
* The rebate amount does **not qualify as income or fee paid** to the dealer/retailer. * It is a **price adjustment reducing the purchase cost** of the dealer. * Since the dealer/retailer is the recipient of the rebate (reducing their cost), there is no **income payment** from your side to deduct TDS on.
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### 4. **Relevant Sections**
* TDS is applicable under sections like 194C, 194J, etc., for **payments of services, professional fees, or contracts**. * Post-sale rebates are **neither payments for services nor fees**; they are adjustments in sale price. * Hence, TDS provisions do **not apply**.
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### **Summary**
| Transaction Type | TDS Applicability | Comments | | ----------------------- | ----------------- | --------------------------------- | | Post-sale volume rebate | No TDS applicable | Price adjustment, not income/fees |
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If you want, I can help you with any supporting circulars or references for documentation purposes. Would you like that?
CAclubindia
