Rate of deduction under section 53E
(1) Any company making a payment or allowing an amount to
a distributor, called by whatever name, or to any other
person by way of commission, discount, fees, incentive or
performance bonus or any other performance related
incentive or any other payment or benefit of the similar
nature for distribution or marketing of goods, shall deduct
or collect tax at the time of payment or allowing the
amount at the rate of ten percent (10%) of the amount of
payment or the amount allowed or the value of benefits
allowed, as the case may be.
(2) Any company making a payment in relation to the
promotion of the company or its goods to any person
engaged in the distribution or marketing of the goods of the
company shall, at the time of payment, deduct tax at the
rate of one point five percent (1.5%) of the payment.
(3) Any company, other than an oil marketing company, which
sells goods to-
(a) any distributor, or
(b) any other person under a contract,
at a price lower than the retail price fixed by such
company, shall collect tax from such distributor or such
166
any other person at the rate of five percent (5%) on the
amount equal to B x C, where-
B = the selling price of the company to the
distributor or the other person;
C = 5%:
Provided that a cigarette manufacturer company shall
collect tax at the time of sale of its goods to such distributor
or to such other person at the rate of three percent (3%) of
the difference between the sale price to the distributor or the
other person and the retail price fixed by such company.
(4) In this section-
(a) “payment” includes a transfer, credit or an
adjustment of payment, an order or instruction of
making payment;
(b) “contract” includes an agreement or arrangement,
whether written or not.
167