Tds on royalty payment to government

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CA.Ashish (Querist)

16 November 2011 A person is conducting business of stone crushing (i.e. quarry/mine) in Gujarat since many years. For that he pays royalty to government relating to excavation and supply of stones as per rates decided by government.

Now all of sudden government department demands TDS (with interest for non-payment in time) to be paid on such payment of royalty.

Further, dept. says TDS to be paid in addition of royalty payment (i.e. not to be deducted from payable to government as royalty).

As per my knowledge there is no need to deduct TDS when payee is government.

Now question is how govt. dept. can take a stand like this by demanding TDS as above and that to also not deductible from payments?

Can anyone suggest further steps/action need to do.

Thanks in advance.

Rajnish Singh

Rajnish Singh (Expert)

16 November 2011 Dear Sir,

You are right ,But some point are considerable in this concern.

@ On the payment of Royality company dont make deduction of tds. question is, has company received TDS exemption certificates from govt body what ever applicable.

If You dont get in that case you have to receive the certificates from there side or have to pay tax as gov demand.

thanks

CA.Ashish

CA.Ashish (Querist)

19 November 2011 Thanks Rajnish for your reply....

I go through the matter and at last found that company is getting rebate in tax for such payment. So no need to worry much...

Thanks again for your interest.