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TDS ON PAYMENT TO MARKETING AGENCIES & CLAIM

Paper 7 : Direct Taxation
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TDS ON PAYMENT TO MARKETING AGENCIES & CLAIM

Postby Ajeetsinghrayat on Mon Jun 17, 2013 1:08 pm

Hi All,

I am working in a P & G Distributor (Pvt. Limited Co.) Our Purchase includes goods purchase of Direct Marketing Sales (goods for the purpose of house to house Sale) and the sale includes the Sale of Direct Marketing Goods. We had agreement with some of the local Agencies, the agencies take our goods and sale; the agencies use to raise bill in our name of the company on monthly basis and same same amount we get back from P & G Limited as claim for Expenses.

The Accountants here passed some entries like-

Refundable Claim A/c...........................Dr

To Direct Marketing Agencies (Creditors)

and at the time of Payment to the Party

DM Agencies A/c......................................Dr

To Bank

in my view there should be TDS under Section 194C on payment to DM Agencies and before booking bill entry of Expenses the booking claim and the payment to party i believe wrong
My Senior Said that there shall be no tds matter because it is claimable/reimbusable

Please clear my doubt

Thanking you


Regards

Ajeet Singh
CMA Inter
Kolkata
Email ID-ajeetsinghrayat@gmail.com
Contact No:- 9674155411
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Re: TDS ON PAYMENT TO MARKETING AGENCIES & CLAIM

Postby ISWAR on Mon Jun 17, 2013 4:38 pm

TDS on rembursement is not required if separate bill are raised.
Refer:1. ITO Vs Dr.Willmar Schwabe India (P) Ltd. [2005] 95 TTJ 53 (Del).

If single bill raised in such case tds to be made on the gross amount.refer the below circular.

Reimbursement of actual expenses - Section 194C refers to ‘any sum paid’. Obviously, reimbursement of actual expenses cannot be deducted out of the bill amount for the purpose of tax deduction at source—Circular : No. 715, dated 8-8-1995.

http://law.incometaxindia.gov.in/DitTaxmann/IncomeTaxActs/2008ITAct/cirsec194C.htm.
Last edited by ISWAR on Mon Jun 17, 2013 4:55 pm, edited 1 time in total.
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Re: TDS ON PAYMENT TO MARKETING AGENCIES & CLAIM

Postby Ajeetsinghrayat on Mon Jun 17, 2013 4:43 pm

Sir I have just gone through the agreement between the Direct marketing agencies with us and found the relationship is clearly written "principle to principle basis"

should it be leviable under the net of section 194C and tds should be deducted or not...

Is it right not to show the expenses in our books as the expenses are claimable..
Ajeetsinghrayat
 
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Re: TDS ON PAYMENT TO MARKETING AGENCIES & CLAIM

Postby ISWAR on Mon Jun 17, 2013 6:41 pm

Ajeet,

For accounting it is correct , you can show as recoverable .
for other refer above comment
Last edited by ISWAR on Mon Jun 17, 2013 6:41 pm, edited 1 time in total.
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Re: TDS ON PAYMENT TO MARKETING AGENCIES & CLAIM

Postby Ajeetsinghrayat on Mon Jun 17, 2013 7:21 pm

Thank you sir
Ajeetsinghrayat
 
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