TDS on Rewards
This query is : Resolved
Querist : Anonymous
Querist :
Anonymous
(Querist)
06 March 2011
Dear All,
Plz help me in solving this query.
A private ltd co. gives rewards in kind (eg: bike, refrigerator, TV etc) to its distributors if they complete a certain target. Is it liable to deduct TDS on such rewards. If so then under which section and at what rate.
Plz help me in solving this query.
A private ltd co. gives rewards in kind (eg: bike, refrigerator, TV etc) to its distributors if they complete a certain target. Is it liable to deduct TDS on such rewards. If so then under which section and at what rate.
CS LLB Pulkit Gupta
(Expert)
06 March 2011
If the gift is in cash, tax will be deducted from cash prize.
If the gift is not in cash or in kind, the payer has to collect the liability for tax deduction from payee.
The payee needs to deposit the amount first with the payer...
For example let Mr. a win scooter from Bajaj Company and the value of scooter is 30000. The tax liability will be 9270 (30.9% of 30000) which either recovered by Bajaj company from Mr. a or Mr. a can directly deposit this amount with the government.
If the gift is not in cash or in kind, the payer has to collect the liability for tax deduction from payee.
The payee needs to deposit the amount first with the payer...
For example let Mr. a win scooter from Bajaj Company and the value of scooter is 30000. The tax liability will be 9270 (30.9% of 30000) which either recovered by Bajaj company from Mr. a or Mr. a can directly deposit this amount with the government.
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CS LLB Pulkit Gupta
(Expert)
06 March 2011
I request other experts too to give their view on this point as I am a bit confused whether the rewards in kind given by Co. in this case qualifies as gift or not.
06 March 2011
TDS WILL BE DEDUCTED
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06 March 2011
In the cases where in incentives to promote sales are given to the distributors or commission agents in cash, they ordinarily require tax deduction at source as commission under Section 194H of the Income tax Act,1961. In the case of lottery winnings, there is specific provision that, where the winnings are in kind, payment of tax on equivalent value has to be ensured by the giver under Section 194B of the above said act before parting with the winnings. There is no such similar provision in Section 194H. But it stands to reason that the value of motor bike, television etc., has to be included as commission and tax has to be deducted thereon under section 194H of the said act.
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07 March 2011
I think rewards in kind given by a company to distributors fall u/s 194H and TDS is to be deducted @ 10%
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