IS CASH DISCOUNT ALLOWED BY A SELLER IS LIABLE FOR TAX DEDUCTION AT SOURCE U/S 194 A
9 Replies
Sandeep Keswani
(Tax Consultant)
(1064 Points)
Replied 30 April 2011
NO ! Section 194A specifically provides for deduction of tax ONLY in case of Interest other than Interest on Securities. Cash Discount can by no means treated as Interest. Cash Discount is in the nature of incentive provided for prompt payment and is not in the nature of Interest.
Hence no TDS should be deducted from Cash Discount, not only u/s. 194A, but under any other provisions of the any other section of the Income Tax Act.
U S Sharma
(glidor@gmail.com)
(21063 Points)
Replied 30 April 2011
cash discount allowed and credited on account of buyer , reduces the payment liability of buyer, here no TDS
but
if cash discount is PAID in cash / bank to buyer or anybody else related / unrelated to buyer, then its subject to TDS under head of commission.
Pavan Bharadwaj
(Practicing Chartered Accountant)
(353 Points)
Replied 01 May 2011
No. 194A is for dedcting tax on interest otherthan on securities. Cash discount is not not a interest.
SONU
(ACCOUNTANT TAX CONSULTANT)
(21 Points)
Replied 07 January 2016
there discount is income according to income tax therefore tds deducted under section 194h is treated as income from commission
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