If Payment made by Franchiser to franchisee as a clause return on Investment with a condition ( @ 15% on Deposit(kept by franchisee) or 7 % on MRP Sale whicherver is high - is liable for TDS as commisson or TDS on Interest or TDS is not applicable
illustratative :
Franchisee kept deposit with franchiser amount Rs 850000/-
with a clause to get 15% on 850000/- or 7 % MRP sale per month
how the TDS applicability on this terms
Regards
Manohar
TDS U/S 194 H COMISSION/ BROKERAGE WILL APPLY...SINCE THE NATURE OF PAYMENT WILL REMAIN AS COMISSION/BROKERAGE EVEN IF CLUASE OF 15% APPLY IN ANY MONTH..ITS JUST THE WAY TO COMPUTE THE AMOUNT OF .COMISSION IS MADE DEPENDENT ON THE AMOUNT OF DEPOSIT...
ANOTHER REASON THAT TDS ON INTEREST WILL NOT BE ATTRACTED IS THAT "U CANNOT SAY THAT FOR PARTICULAR MONTH THE INTEREST WAS PAID & FOR NEXT MONTH THE INTEREST WAS NOT PAID AND THEN FOR SUBSEQUENT MONTH THE INTEREST WAS PAID AGAIN"
I HOPE THIS CLARIFIES U...
BHUPINDER SHAH AND COMPANY
New Delhi
CA Inter
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CAclubindia
