Tds to be deuducted on gifts

1765 views 3 replies

Dear All,

one of my client is running contest to boost his business. Gifts like Vouchers, Gold Coins, Mobile etc. is being given to winner. The cost of gifts is exceeding Rs. 10,000. Here my client itself is bearing TDS, over and above the gift amount, client is depositing TDS @ 30% on gift amount.

My concern is whether TDS amount should be 30% of Gift amount or Backward calculation needs to be done. Backward calcuation means since we are bearing TDS amount hence Gift amount should be taken as 70% (after TDS of 30%) and TDS amount should be arrived by dividing the gift amount by 70 and then multiplying with 30.

e.g. if Gift amount is 14,000 then TDS should be Rs. 4,200 (14000 X 30%)...OR... Rs. Rs. 6000 (14000/70 X 30)..

please provide case law or clarificatory note also, if any.

 

Replies (3)

TDS on gifts is to be made on the  total value of the gift/prize.  Suppose if a person wins a Car in contest.  the cost of the car is ay 5lacs inculding all taxes, duites, insurance etc..then TDS needs to be made by the person grantingt eh gift/prize @ 30% on the value of 5lacs.  Here the burden is being borne by the person accepting the gift/prize and not by the person who is giving the gift.  So teh person giving the gift will recover teh amount of TDS from the person taking the gift.

In your case also TDS shud be made on the amount of 14000 & not by way of backward calculation.  Tehre are no case laws for this.

i am not saying the answer but just verify this,https://www.google.co.in/url?sa=t&rct=j&q=&esrc=s&source=web&cd=10&cad=rja&ved=0CH8QFjAJ&url=http%3A%2F%2Ffinance.groups.yahoo.com%2Fgroup%2FICAI_CIRC_MEERUT_CA%2Fmessage%2F90828&ei=nL4lUdhEybisB_qJgWA&usg=AFQjCNFkN55TGKLQ_H2MmMAE8MYKQbiFSw,

thanks for the question

 

Dear Giridhar,

 

Thanks for your reply..

However in my case, the burden is being borne by the person giving the gift. The amount of TDS is not being recovered from the person receiving the gift. Then in such case what should be done..


 

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