In the light of the following circular can someone explain whether TDS u/s 194H will attract for canvassing commission paid by chit company for acquiring customers?
I will summarize the conclusion of the circular for your understanding...
Basically in advertising business there are two payments involved;
1. Payments made by customers to advertising agencies for which TDS under section 194C should be deducted.
2. Payments made by advertising agencies to new papers/publishing houses/television channels for which whether tds provisions will attract or not.
For this Department has clarified that since the relationship between advertising company and television channel is on principal to principal basis, hence tds under section 194H will not attract.
In the present case, chit company is paying the canvassing commission for procuring customers to whom?
1. If suppose, the payment made to newpaper companies or television channels, then tds should be deducted under section 194C of the Act.
2. If the payment made to persons who are doing sales promotion on behalf of the company, then it is treated as commission or brokerage for which tds should be deduction under Section 194H of the Act.
The above circular will not be applicable in your case, since there is only single payment involved in the transaction for which applicability of tds provisions will arise based on, to whom the payment is being made.
Hi Sri Ram...!!!!
I will summarize the conclusion of the circular for your understanding...
Basically in advertising business there are two payments involved;
1. Payments made by customers to advertising agencies for which TDS under section 194C should be deducted.
2. Payments made by advertising agencies to new papers/publishing houses/television channels for which whether tds provisions will attract or not.
For this Department has clarified that since the relationship between advertising company and television channel is on principal to principal basis, hence tds under section 194H will not attract.
In the present case, chit company is paying the canvassing commission for procuring customers to whom?
1. If suppose, the payment made to newpaper companies or television channels, then tds should be deducted under section 194C of the Act.
2. If the payment made to persons who are doing sales promotion on behalf of the company, then it is treated as commission or brokerage for which tds should be deduction under Section 194H of the Act.
The above circular will not be applicable in your case, since there is only single payment involved in the transaction for which applicability of tds provisions will arise based on, to whom the payment is being made.
Hope you got the clarity !!!
Thanks for the answer.