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TDS Rule: CBDT says no need to tax deduction on share buying by Exchange Income tax department

The Income Tax Department said that it has received memorandums that there are practical difficulties in implementing the provisions of TDS under Section 194-Q of the Income Tax Act in transactions through certain exchanges and clearing corporations.



Companies that purchase shares or commodities of any value in the course of trading from a recognized stock exchange or commodity exchange will not be required to deduct tax at source (TDS) on the transaction. The Income Tax Department has said this. This will also apply to shares or commodities of value more than Rs 50 lakh. The Central Board of Direct Taxes (CBDT) has issued instructions in this regard.

The Income Tax Department has implemented the provision of Tax Deduction at Source (TDS) from July 1. This will be applicable to companies with a turnover of more than Rs 10 crore. Such units are required to deduct TDS of 0.1 per cent on payment of purchases of goods exceeding Rs 50 lakh from a resident in a financial year. The Central Board of Direct Taxes (CBDT) said that this provision will not apply to transactions of shares or commodities through stock exchanges.

The Income Tax Department said that it has received memorandums that there are practical difficulties in implementing the provisions of TDS under Section 194-Q of the Income Tax Act in transactions through certain exchanges and clearing corporations. Many times in such transactions there is no contract between buyer and seller with each other.

According to the guidelines issued by the CBDT on June 30, “Section 194Q of the Act to remove such difficulties shall not apply in cases where securities and commodities are transacted through recognized stock exchanges or clearing corporations.” Has happened.

Explain that section 194-Q related to deducting TDS by companies was introduced in the budget of 2021-22. This provision has come into effect from July 1, 2021.

 

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