Mobilisation Advance is being given to Government Contractors in most cases. For these advances given the contracor has to pay interest on same. Further the Adavance is either adjusted from the running bills or refunded back by contractor. In these cases whether TDS has to be dedcuted on such advances. Plz. take note that these advances are basicall in nature of soft loans on which interest is also being charged. Kindly advise.
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Tds applicability on mobilisation advance
Replies (1)
Section 196 in The Income- Tax Act
196. Interest or dividend or other sums payable to Government, Reserve Bank or certain corporations Notwithstanding anything contained in the foregoing provisions of this Chapter, no deduction of tax shall be made by any person from any sums payable to-
(i) the Government, or
(ii) the Reserve Bank of India, or
(iii) a corporation established by or under a Central Act which is, under any law for the time being in force, exempt from income- tax on its income, or
(iv) a Mutual Fund specified under clause (23D) of section 10, where such sum is payable to it by way of interest or dividend in respect of any securities or shares owned by it or in which it has full beneficial interest, or any other income accruing or arising to it.]
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