TDS on Brokerae 94 H appplicability to share brokers

[Narayanan L.]

Dear Members,

 

A is a Broker of NSE. B is a sub broker of A. A  regularly pays commission , Brokerage to B, Whether these payments are liable to TDS under 194H at the applicable rates.

 

Explanation.For the purposes of this section, 194H

(i ) commission or brokerage includes any payment received or receivable, directly or indirectly, by a person acting on behalf of another person for services rendered (not being professional services) or for any services in the course of buying or selling of goods or in relation to any transaction relating to any asset, valuable article or thing, not being securities;

In my opinion tax need not be deducted as per law and these payments are allowable as a deduction and out side the scoope of section 40 where the payments are allowed as a deuction on actual payment of TDS.

 

PLease share your views
--
Sincerely
L.Narayanan
Chartered Accountant
# 79/4, Ram nagar,
Komarasamypatty
Salem.636 007
tel.: 91-427-2310379,
mobile.: 99943-44711

[Jignesh Parekh]

Respected Mr Narayan

 

Your views are on the line. but as per my knowledge the brokerage for the share transactions payable to sub broker will attract TDS , there is clear noting that sub brokeer commisiion will attract TDS above payment of Rs.5000. I would like to another thought is there any difference on sub broker commision on shares and on Mutual Funds unts are they also eligilble for no deduction of TDS. Pls give your views.

 

Regards

 

Jignesh Parekh

Taxation Department

Prudent CAS Ltd

Ahmedabad

[Narayanan L.]

Dear Mr.Jignesh,

I have not come across any specific circular or clarification is issued by the IT dept with respect to either deduction or non deduction to Brokers and sub borkers dealing in Securities. If you have come across any such circular you may please send,

 

As regards the mutual funds, Brokerage or Commission in respect of any item  falling with in the purview of securities under the Securities contract Act should be out side the scope of section 194H

 

With thanks

Narayan

 

[Visvanathan Sivaraman]

Dear Friends,
The word "SECURITIES" is the catch.

I am of the openion that a security is loan instrument which is secured like a debenture or a govt [state / certral] bonds secured by government. Where as a share is not a security but an ordinary investment with limited liability and no security. Hence 194H is stricly applicable.

sivaraman

[Narayanan L.]

Dear Mr. Viswanathan Sivaraman,

 

 

The INcome tax act for the purpose of section 194 H referes the Secutties Contract (Regulation Act)  wherein  Securities is defined as under

(h) "securities" include -

(i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate;

(ii) Government securities;

(iia) such other instruments as may be declared by the Central Government to be securities;

(iii) rights or interests in securities;

 

 

Considering the above definition I do not find the applicability of Sectin 194H for share Brokers.
 

Your comments - Please
 

On 8/19/06, Visvanathan Sivaraman <krusn...@gmail.com> wrote:

Dear Friends,
The word "SECURITIES" is the catch.

I am of the openion that a security is loan instrument which is secured like a debenture or a govt [state / certral] bonds secured by government. Where as a share is not a security but an ordinary investment with limited liability and no security . Hence 194H is stricly applicable.