Who is responsiible for deduct tds

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santosh sandilya (Querist)
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20 November 2011 Dear Sir,

If any person is paying salary or any expense on behalf of any other person then who is responsible for deduct Tds.

Ram Avtar Singh

Ram Avtar Singh (Expert)
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20 November 2011 The Claimer of exps.is booking exps in his books of accounts and will deduct TDS and deposit to govt. No TDS on reimbursment.

CA SUMiT PATWARi

CA SUMiT PATWARi (Expert)
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20 November 2011 The principal payer is generally responsible.

Please elaborate on the arrangement.

Sanjana

Sanjana (Expert)
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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.......

Sanjana

Sanjana (Expert)
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