Please give your expert opinion on 194B

Tax queries 563 views 3 replies
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Asst Mgr-Taxation
6918 Points Joined April 2009

Dear Learned Members/Students/Experts

We have run a lucky dip scheme wherein Influencers (namely Painters) are eligible for receiving  a Scooty .These Influencers are attached to a Particular Dealer in Various Locations whose (Dealers) accounts are maintained by our company in our books.Since the Painters are not having PAN and unable to bear the 30% amount  can the company can give credit note to the dealer in such  a case to avoid TDS ? If so, how the credit note should be given as this Scheme circular was circulated in the Markets

Please do give your valued opinion any reference to case laws etc

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On 21 December 2010 at 11:43 Report
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B€ @LW@¥$ ]-[@Pp¥
1832 Points Joined March 2009

Section 194B is applicable in case of gifts. In case of credit note is given instead of gift in kind, the company may deduct tax at source @ 30% from the amount of credit note.

 

If the amount of credit note can also be shown as commission of discount to painters, so TDS u/s 194B shall not be applicable. However, TDS u/s 194H (brokerage and commission) shall be applicable.

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On 21 December 2010 at 12:16
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Doing Job
35 Points Joined October 2009

Hi Sivaram,

I will suggest you not to route the entry through dealer because it is complicated & avoidance of Sec.194B.In my opinion your company should pay the TDS & same shall be shown by you as loan & advances which is to be recovered from Influencers in small amts. periodically.

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On 27 December 2010 at 18:08
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glidor@gmail.com
21068 Points Joined January 2010

in a nutshell u want to save the 30% burden of TDS applicable 

 

in such case get all such scooties registered in name of principal company + painter ( joint holder) then transfer the same at a later date on wdv or lesser as bonus for marketing your products. 

 

this will reduce your tax burdens, 100% exemption not possible !!

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On 28 December 2010 at 13:45


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