Festive Savings Are Here. Get 10% OFF on All CCI Pro Plans. Subscribe Now!

Section 194R Applicability for Silver Coins to Dealers

3248 views

Save Share

Ketan Modi

21 Points Posted on 09 February 2023

The Company has a Distributor in Ahmedabad. Distributor has more than 200 Dealers. The Company sells to Distributors and Distributors in turn sells to Dealers. The Company in consultation with Distributor designed a Silver Coin Scheme for Dealers. The Silver coins are purchased by Company in its books and thereafter distributed to all the Dealers, who have achieved the Target under the Scheme. In this case, 1) Please confirm whether Section 194R is attracted or not? 2) What should be TDS obligation of Company? 3) From whom the Company should deduct TDS either from Distributor or Dealer? 4) Company does not have direct dealings with Dealer in that case, what it should do for TDS Obligation and Deducting from whom? 5) Which is the Key Reason for Attracting TDS Liability on the Company?

Replies (5)

Quick Summary

This discussion explores the applicability of Section 194R of the Income Tax Act concerning silver coins distributed as incentives to dealers. It clarifies whether the company, which supplies through a distributor, has a Tax Deducted at Source (TDS) obligation. The consensus suggests that TDS is applicable if the benefit exceeds ₹20,000 annually, with deductions potentially made from the distributor or directly from the dealer depending on the distribution channel.

Dhirajlal Rambhia

SEO Sai Gr. Hosp.

121534 Points Posted on 13 February 2023

Yes, TDS should be deducted from distributor/s accounts, as the company is distributing it (to dealers) through distributors.

CA Sorav Gupta

Chartered Accountant

328 Points Posted on 13 February 2023

1) Yes, TDS u/s 194R @ 10% will be deducted as the company is providing benefits in kind during the course of business to the dealers provided the value of coins is more than Rs. 20,000/- in a financial year.

2) If the coins will be sent to the distributors then TDS will be deducted from the distributors and if the coin will be send directly to the dealers then the TDS will be deducted from dealers.

In case of any further queries, kindly mail me at casoravgupta @ gmail.com

Thanks & Regards
CA. Sorav Gupta
(Practicing Chartered Accountant)