BILL DISCOUNTING & TDS

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Dear Friend, In relation to your bill discounting query, to my knowlede, there is one favorable ruling of Madras ITAT which states that on discounting charges no TDS is required u/s 194A (86 ITD 283) which seems to have not been considered in Del ITAT Kanha Vanaspati case. Further, in this connection, CBDT Circular No. 647 dated 22 March 1993 and 86 of 1972 may be usefully referred to. Regards Kapil Goel ACA LLB

thanks i am discounting my bill of Rs. 50,00,000/- thru a private party mr.A and he is deducting Rs.50,000/- as a bill discounting and send me a Cheque of Rs. 49,50,000/- should i require to deduct tax u/s. 194A on rs. 50,000/- whether it covers under definition of Interest ?

Cheque Discounting charges are different from Interst and hence not liable to TDS. (ITO V/s A S Babu Shah (2003) 86 ITD 283 (Mad.)

here we are not cheque discounting but bill discounting and as per latest judgement in case of of Kanha Vanaspati Ltd..v.Additional Commissioner of Income-tax, Range-50, New Delhi, it has been stated that TDS is applicable on bill discounting bcoz it is interest in indirect form it is different matter u called by whatever name either financial charge, bill discounting, service charge but it is eligible for tds u/s.194A

here we are not cheque discounting but bill discounting and as per latest judgement in case of of Kanha Vanaspati Ltd..v.Additional Commissioner of Income-tax, Range-50, New Delhi, it has been stated that TDS is applicable on bill discounting bcoz it is interest in indirect form it is different matter u called by whatever name either financial charge, bill discounting, service charge but it is eligible for tds u/s.194A