TDS on incentives, Income Tax

[KRISHNAMURTHY S P]

Company having dealers all over india, supply goods to dealers under a contract of sale. If the dealer achieves the turnover target, company provide certain incentives like, salary reimbursment of some of the employees, advertisment cost etc. Is the company liable to deduct tax on these incentive given to dealers.

Posts / Replies

[Rama Krishana]

If it is in the nature of brokerage or commission, obviously yes, you need to deduct TDS on such payment. But, if it is in the nature of discount, no TDS is required to be deducted. In my view, where the dealers are acting as independent distributor / seller and the company is selling product to them, the nature of incentives, reimbursements of some expenses would be in the nature of Discount only.