TDS Liability to Telecom Prepaid Distributor
Ranjith
(Querist) 25 April 2011
This query is : Resolved
We are distributors of Vodafone dealing in Prepaid sales of recharge tickets and sim cards. Recently BSNL started deducting TDS on the total margin given to the distributors . In the event if Vodafone also stats deducting TDS on the total margin given to us (1.13 % Dist Margin and 4% retailer Margin - totaling 5.13 %) it will come to o.513% which will get deducted from our total margin of 5.13 %.
In this case are we liable to deduct TDs on our sales to the retailers. Presently we are parting 4% of the total margin to the retailers and are not deducting TDS on this margin.
Kindly give us your expert opinion as the case of TDS is in Supreme court by TDS.Since BSNL stated deduction of TDS this will set a precedent and will adversely affect the case of Vodafone in court.
Guest
(Expert) 25 April 2011
Dear Ranjith,
It is not the question of percentage rate of commission, which you receive and what you pay to the retailers. It is the limit of payment what BSNL pays or you pay to your retailers.
Please check the provisions of Sec. 194C of the Income Tax Act. There is a per transaction (per payment NOT transaction per subscriber) and annual limit for deduction of TDS for contractors. If you pay above that limit to your retailers, you will also have to deduct TDS from their payment, otherwise not.
