CASH DISCOUNT CANNOT BE SUBJECT TO TDS: APEX COURT

The apex court has ruled that when the government offers bulk buyers of stamp papers commission ranging from 0.5 per cent to 4 per cent, what it is offering is cash discounted as inducement for bulk purchases and not commission on sales. The Supreme Court held that the stamp vendors did not earn their reward on sale but at the time of purchase and hence it was cash discount rather than commission. Section 194H contemplates deduction of tax at source at the time of payment of commission whereas in these transactions there was no payment of commission at all.