TDS on reimbursement to C & F Agent
This query is : Resolved
19 December 2007
At present we are deducting TDS on the total Bill of our C&F Agent - though some part of the Bill is for re-imbursement and further part is for commission.
Could we exclude TDS from the re-imbursement portion?
Could we exclude TDS from the re-imbursement portion?
19 December 2007
Pankaj,
For doing so, you need to bifurcate the bill into two parts. One bill for re-imbursement and the other for commission. In the absence of the same the total amount shall be subject to TDS. By bifurcating, only the bill containing the commission shall be subjsct to TDS and not the re-imbursement.
Rgds/
Vineet
For doing so, you need to bifurcate the bill into two parts. One bill for re-imbursement and the other for commission. In the absence of the same the total amount shall be subject to TDS. By bifurcating, only the bill containing the commission shall be subjsct to TDS and not the re-imbursement.
Rgds/
Vineet
19 December 2007
I believe :
If the consolidated bill is raised for the service charges and the reimbursement bill, it will be difficult to deduct the re-imbursement expense from the said amount. This is precisely what is communicated by Ans. 30 of Cir. 715. In fact, the said Cir. 715, in the manner worded, seems to be applicable to a case where the bill is of consolidated amount.
Circular No: 715 (Date of Issue: 8/8/1995)
Question 30 : Whether the deduction of tax at source under section 194C and 194J has to be made out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses ?
Answer : Sections 194C and 194J refer to any sum paid. Obviously, reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source.
If the reimbursement expenses is raised by a separate debit note which do not include any service charges, there would not be any implication of the TDS since the said payment do not constitute a payment to any contractor and hence Section 194C would not be attracted.
If the supporting bills are in the name of the factory, it would be an added advantage. .
If the consolidated bill is raised for the service charges and the reimbursement bill, it will be difficult to deduct the re-imbursement expense from the said amount. This is precisely what is communicated by Ans. 30 of Cir. 715. In fact, the said Cir. 715, in the manner worded, seems to be applicable to a case where the bill is of consolidated amount.
Circular No: 715 (Date of Issue: 8/8/1995)
Question 30 : Whether the deduction of tax at source under section 194C and 194J has to be made out of the gross amount of the bill including reimbursements or excluding reimbursement for actual expenses ?
Answer : Sections 194C and 194J refer to any sum paid. Obviously, reimbursements cannot be deducted out of the bill amount for the purpose of tax deduction at source.
If the reimbursement expenses is raised by a separate debit note which do not include any service charges, there would not be any implication of the TDS since the said payment do not constitute a payment to any contractor and hence Section 194C would not be attracted.
If the supporting bills are in the name of the factory, it would be an added advantage. .
19 December 2007
Hi Pankaj,
Its a very common query which comes every now and then. The matter which i jave mentioned is covered under circular no. 715. Further it seems you know the facts, then what is your query? Did you want to confirm the fact?
Rgds/
Vineet
Its a very common query which comes every now and then. The matter which i jave mentioned is covered under circular no. 715. Further it seems you know the facts, then what is your query? Did you want to confirm the fact?
Rgds/
Vineet
19 December 2007
i am not too shure of my belief...there is no precedent for/against this fact.
Also this is weird :
if i pay the C & F agent 30,00,000 for goods (reimbursement) and pay him 10,000 as commission and consequently deduct TDS u/s 194C over the entire amount 2.27% of 3010000 i.e. 68327 !!??!!
Trying to find a way out...
Also this is weird :
if i pay the C & F agent 30,00,000 for goods (reimbursement) and pay him 10,000 as commission and consequently deduct TDS u/s 194C over the entire amount 2.27% of 3010000 i.e. 68327 !!??!!
Trying to find a way out...
22 December 2007
Hi Pankaj
Tds should be deducted on gross billing amount inclusive of reimbursement. To avoid this commission should be raised in the bill and for reimbursement expenses debit note be raised.
Tds should be deducted on gross billing amount inclusive of reimbursement. To avoid this commission should be raised in the bill and for reimbursement expenses debit note be raised.
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