20 November 2011
If suppose A Ltd. is paying on behalf of B Ltd. It may be a scenario where A Ltd is paying to the party because of practicality or other reasons for eg. A Ltd. is located close to the party and B Ltd. is located in some other city...and the bill/invoice is issued by the party in the name of B Ltd. then TDS will have to be deducted and paid by B Ltd.
But if Bill/Invoice is issued by the party in the name of A Ltd. and A Ltd. pay for it then it is expenditure incurred by A Ltd. and TDS will have to be deducted and paid by A Ltd. even though the expenditure does not relate to the business of A Ltd and he is merely paying on behalf of B Ltd. because it was not practically feasible/possible for B Ltd. to contract direct with the party or it was necessary that A Ltd. should contract with the party...
In this case when A Ltd. gets this amount from B Ltd., no TDS will have to be deducted by B Ltd. since it is a mere reimbursement of expenditure....
A case of Reimbursement arises only if it is practically essential....like for eg. in the first parah when merely due to the fact that A Ltd. is operating close to the party and hence is paying to the party, the bill must be taken in the name of B Ltd. since it is merely a payment on behalf of B Ltd.......
20 November 2011
If suppose A Ltd. is paying on behalf of B Ltd. It may be a scenario where A Ltd is paying to the party because of practicality or other reasons for eg. A Ltd. is located close to the party and B Ltd. is located in some other city...and the bill/invoice is issued by the party in the name of B Ltd. then TDS will have to be deducted and paid by B Ltd.
But if Bill/Invoice is issued by the party in the name of A Ltd. and A Ltd. pay for it then it is expenditure incurred by A Ltd. and TDS will have to be deducted and paid by A Ltd. even though the expenditure does not relate to the business of A Ltd and he is merely paying on behalf of B Ltd. because it was not practically feasible/possible for B Ltd. to contract direct with the party or it was necessary that A Ltd. should contract with the party...
In this case when A Ltd. gets this amount from B Ltd., no TDS will have to be deducted by B Ltd. since it is a mere reimbursement of expenditure....
A case of Reimbursement arises only if it is practically essential....like for eg. in the first parah when merely due to the fact that A Ltd. is operating close to the party and hence is paying to the party, the bill must be taken in the name of B Ltd. since it is merely a payment on behalf of B Ltd.......
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