Service Tax/TDS

TDS 745 views 3 replies

B S BHMRA

Managing Partner

102 Points Joined January 2011

Dear Friends,

Could someone enlighten me on the following: I undertake trading in online commodities, in client's own a/c, with their own capital investment and on their behalf, with a mutual agreement of profit/loss sharing on a 50:50 basis. The following queries arise: (For example we will assume that the annual profits are Rs 5.00 lacs)

1. As the entire profits of Rs 5.00 lacs will be in the client's a/c and he repays me half of the same which will amount to Rs 2.50 lacs:

a) Will the client have to deduct TDS from the amount payable to me? If yes, how much? And how will it be deducted monthly or annualy?

b) Will the client have to take TAN number/card for deducting TDS? And what if I have multiple clients? Will every client have to take the TAN number/Card?

c) Alternately will it not be sufficient if the above income from all clients is declared by me in my IT returns, and a copy of the same is submitted to all the clients for their records?

d) Can you please suggest the best way to go about it?

e) Finally, is service tax also appliable to the above, if so how much ?

Thanks & Regards, in anticipation, to all.

Replies (3)

Mihir

Wealth Manager

5293 Points Joined December 2008

I doubt because its a profit sharing, and not fees paid to you.

Lets see what others have to say.

Harpreet

* * * * * *

1670 Points Joined March 2008

if i assume neither he is a professional income more than 15 lacs nor buisness income more than 40 lacs (as already increased in budget) then he does not to register himself for TAN and for Service tax he doesnt provide you the services so no need to get register with Service Tax Department.

I will advise you that take cheques from clients as commission and consider the same in your income tax return and file the income tax return by paying income tax thereon. the same is business income for you and use ITR-4 to file IT Return

CA RV

Manager-Accounts & Taxation

33 Points Joined April 2008

The transactions seems to be purely based on oral agreements and the fee/share of profit received/receivable in nothing but fee for professional activity provided to the client by using technical & professiional skills. Hence the client has to obtain TAN & TDS need to be deducted at the rate of 10%.

Alternatively If there is An arrangement like AOP (Association of persons) for sharing of profits then TDS can be avoided by doing transactions combinedly.