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TDS by agent when he is liable to pay and not by principal even if reimbursement is made.

TDS by agent when he is liable to pay and not by principal, even if reimbursement is made. - Income Tax - Direct Tax Code - DTC - By: - CA DEV KUMAR KOTHARI - Dated:- 21-3-2016 - Consignment Agents: Manufacturer of goods, whole sellers, and other business entities, engage agents in different parts of country for selling goods as Consignment Agents. Consignment Agents sell goods on behalf of principal and during the course of business use their own establishment and infrastructure. Consignment Ag .....

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ions relating to TDS/ TCS, the Consignment Agent is a different entity and is liable for compliance of his own payment of tax on income as well as TDS/ TCS where he is liable person for payment to others or while receiving payment from others. People and other parties engaged by Consignment Agents: When a Consignment Agents engage any person as his employee or service provider, he enters into agreement with employee and other party. For example, Consignment Agents may take shops on rent, engage .....

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paid can be directly allocated whereas a part of salary of sales team can be claimed on estimated basis. Whether any reimbursement is claimed or not from principals, the Consignment Agents remain person responsible to make payment to such persons/ parties engaged by him. Tax Deduction by Consignment Agents: In such cases the Consignment Agents is the person responsible to pay to employee (salary), land-lord (rent) , service providers (commission to sub agents, contractors payment to transporter .....

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yse S. 194C to ascertain liability to deduct tax: Payments to contractors. 194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section referred to as the contractor) for carrying out any work (including supply of labour for carrying out any work) in pursuance of a contract between the contractor and a specified person shall, at the time of credit of such sum to the account of the contractor or at the time of payment thereof in cash or by issue of a cheque or dr .....

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the person who pays to the contractor. Therefore the Consignment Agent is responsible to deduct and pay tax deductible at source, if any, and not the Principal of the Consignment Agent. From some other provisions relating to TDS also we find that the person who is responsible to pay is the person who is liable to deduct tax at source, For example the following provisions : Salary. 192. (1) Any person responsible for paying any income chargeable under the head Salaries shall, at the time of payme .....

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thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier], deduct income-tax 4[***] at the rates in force on the amount of the interest payable : 1[Interest other than Interest on securities . 194A. (1) Any person, not being an individual or a Hindu undivided family, who is responsible for paying to a resident any income by way of interest other than income 2[by way of interest on securities], shall, at the time of credit of such income to the account of the pa .....

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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 2[ten] per cent : [Rent. 194-I. Any person, not being an individual or a Hindu undivided family, who is responsible for paying to 2[a resident] any income by way of rent, shall, at the time of credit of such income to the account of the payee or at the time of payment thereof in cash or by the .....

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agent is liable to pay and deduct tax from payment or /credit allowed to recipient. In such circumstances the principal is not liable to deduct tax, merely because agent has claimed and principal has made reimbursement in respect of payments made by agent in relation to work of principal. Section 194C is reproduced below with highlights for analysis: Income-tax Act, 1961 1[Payments to contractors. 194C. (1) Any person responsible for paying any sum to any resident (hereafter in this section refe .....

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ndu undivided family; (ii) two per cent. where the payment is being made or credit is being given to a person other than an individual or a Hindu undivided family, of such sum as income-tax on income comprised therein. (2) Where any sum referred to in sub-section (1) is credited to any account, whether called Suspense account or by any other name, in the books of account of the person liable to pay such income, such crediting shall be deemed to be credit of such income to the account of the paye .....

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iable to deduct income-tax on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purposes of such individual or any member of Hindu undivided family. (5) No deduction shall be made from the amount of any sum credited or paid or likely to be credited or paid to the account of, or to, the contractor, if such sum does not exceed 17[thirty thousand rupees]: Provided that where the aggregate of the amounts of such sums credited or pai .....

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ss goods carriages at any time during the previous year and furnishes a declaration to that effect along with] his Permanent Account Number, to the person paying or crediting such sum. (7) The person responsible for paying or crediting any sum to the person referred to in sub-section (6) shall furnish, to the prescribed income-tax authority or the person authorised by it, such particulars, in such form and within such time as may be prescribed. Explanation.- For the purposes of this section,- (i .....

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r for both; or (g) any society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India; or (h) any trust; or (i) any university established or incorporated by or under a Central, State or Provincial Act and an institution declared to be a university under section 3 of the University Grants Commission Act, 1956 (3 of 1956); or (j) any Government of a foreign State or a foreign enterprise or any association or body .....

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