TDS applicability

TDS / TCS 874 views 2 replies

Gautam Patel

CA and CWA

146 Points Posted on 17 July 2009

An assessee( being a dealer in shares and doctor) was subject to Tax audit U/s 44AB in the financial year 2007-08 as its turnover exceeded 10 lakhs . Now it was its first year hence the provision of TDS application was not applied in that year. Now in the subsequent year the assessee has not applied for TAN no and its turnover has exceeded 10 Lakhs and the assessee is purchasing and selling shares through demat a/c in the subsequent year then
a)In case of brokerage paid whtether the asseesee can claim expense in that year if it has not deducted TDS.
or b)whether the assessee should obtain TAN no. and then claim the brokerage paid as expense

Replies (2)

Sandeep

Chartered Accountant

60 Points Posted on 18 July 2009

No deduction will be allowed for brokerage, where Tax is ought to be deducted but not deducted. The TAN no. has to be mandatorily applied.

Under section 194H, for any commission or brokerage paid by an individual, whose accounts are required to be audited u/s 44AB, has to deduct the tax at source @ 10%.

RAJU

LEARNER

1089 Points Posted on 18 July 2009

I give below the explanation (i) to Sectiion 194 which defines `commission or brokerage;

commission or brokerage includes ................................................................. buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing not being securities.

Since brokerage to share agent do not fall within the definition of commission or brokerage, TDS is not applicable on such payments.

Rgds/Dharmaraju