Hi everyone,
Company is selling goods to authorised dealer at a discount. This discount amount is actually to be distributed among distributors on achieving a target on sales. But this amount is not to be paid in cash instead it is to be paid in kind i.e. dealer has to purchase some articles for ex. two wheelers etc out of this discount received amount and then distribute it to salesmen who achieves the target as prizes for achieving the target. My question is what is the treatment of this kind of expenditure in authorised dealer books of accounts as per income tax act? Is this to be treated as sales incentives? Is TDS applicable on this kind of payment? If TDS applicable, under what head it wld cum? If i need to deduct TDS then do i need to ask the salesmen to pay the cash for TDS amount and get their prizes released from the authorised dealer? Articles to be purchased should be purchased in authorised dealer name or it can be purchased in the name of salesmen to whom that article needs to be given as prize?
Kindly provide me the clarifications on this.
Regards,
Satya
CAclubindia
