Tds - sec 197

Hi Everyone,

I have a query on Sec 197 - Certificate for deduction at a lower rate. Is the certificate which is issued to the deductee applicable only to the deductee?

Example:

1.A makes a payment to B after deducting TDS at the appropriate rates in force.

2. B obtains a certificate u/s 197 for deduction of no tax at source. Accordingly A will not deduct TDS if B furnishes the certificate.

3. Now, there is a third party C which comes into picture.

4. C makes a remittance to A and A makes the final remittance to B. Therefore A is only acting as an intermediary.

Query:

Is C liable to deduct TDS on payment to A  ?

Can C take shelter under the certificate u/s 197 issued to B and deduct no TDS while making payment to A ?

Whether A is required to obtain another certificate u/s 197 for the payments made by C to A?

 

I shall be thankful if you can respond at the earliest.

 

Thanks

Punit.

Replies (3)

 

1. Is C liable to deduct TDS on payment to A  ?

Yes. C is liable to deduct TDS on payment A (as commission) as part of intermediary

 

2. Can C take shelter under the certificate u/s 197 issued to B and deduct no TDS while making payment to A ?

No. C cannot take shelter under the certificate u/s 197 issued to B and deduct no TDS while making payment to A , becoz B party is not directly involving in transaction.

 

 

 

It's my opinion, wait for expert opinion by others

If A is making payment to B just on behalf of C, then its always advisable to give certificate to C also by B...The real question is the status/title of A.
Certificate u/s 197 is issued deductee wise only...

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