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Income Tax--TDS

No TDS Obligation Under Section 194H--Where Amount not Credited or Paid to Payee's Account

CA. Nisha Bhandari

Recently an issue came before the Bombay High Court in CIT v. Super Religare Lab. Ltd.'s case as to whether tax is required to be deducted under section 194H even where no amount is paid or credited to the payee's account and there is mere collection from the collection center after reducing their margin. The learned author highlights the outcome of the said decision alongwith other relevant decisions.

1. Tax when required to be deducted under section 194H

Section 194H provides for deduction of tax at source from any income by way of commission or brokerage to a resident. Accordingly any person, not being an individual or a Hindu undivided family, who is responsible for paying, to a resident, any income by way of commission (not being insurance commission referred to in section 194D) or brokerage, shall, at the time of credit of such income to the account of the payee or at the time of payment of such income in cash or by the issue of a cheque or draft or by any other mode, whichever is earlier, deduct income-tax thereon at the rate of five per cent.

However, an individual or a Hindu undivided family, whose total sales, gross receipts or turnover from the business or profession carried on by him exceed Rs.1 crore in case of business and Rs.50 lakh in case of profession, during the financial year immediately preceding the financial year in which such commission or brokerage is credited or paid, shall be liable to deduct income-tax under this section.

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