One of the client I'm working on is into hospitality business, it pays a sum exceeding Rs, 1,00,000 (being the limit for deducting tax at source under section 194C) as recharge for cable tv connection. IS TDS under section 194C applicable in this case?
As per my knowledge, it should not be applicable as section 194C specifies the list of works which includes broadcasting and telecasting for which TDS has to be deducted. Whrereas the above service doesn't get covered as broadcasting as it has a different meaning. Is there any other view saying TDS is applicable? and relevant case laws to support your view (if any).
17 January 2019
I don't think that TDS is applicable in this case. TDS provisions would be applicable on the cable operators when they make payment to the broadcasters
Work has been defined to include "broadcasting and telecasting including production of programmes for such broadcasting or telecasting;"
Normally, there is a chain of distributors and sub-distributors through which the broadcasting is carried out. The main broadcaster is the channel operator and the distributors may also be covered in it as they re-broadcast.
Cable operators, while making the payments, to the TV channel (licensors) are required to deduct tax at source u/s 194C, since TV channel (licensors) are the one providing the broadcasting and telecasting services.
Let's read S.194C again (but in a simplified manner) 194C. (1) Any person responsible for paying any sum to (contractor) FOR CARRYING OUT [broadcasting and telecasting including production of programmes for such broadcasting or telecasting;] shall...deduct an amount equal to...
Let me ask you this, have you (hospital) entered into a contract with the cable operator to "broadcast" or "telecast" the programme? The hospital is a subscriber of the service. Let's take an example of Star India Pvt. Ltd, which provides channels like star plus, star movies, etc. They are broadcasting the programme, and the cable operators are re-broadcasting it.
Who do you think would have been the parties to enter into the contract for broadcasting? I guess Star India Pvt. Ltd & the (Let's say) DTH, or let's say tata sky.
Draft copy of agreement with DPO's [license agreement DAS/DTH/HITS/IPTV] [https://www.startv.com/media/2838/rio-das-06-12-2018.pdf] [DAS] As you can see, that they are re-broadcasting what is being broadcasted by the Star India Pvt. Ltd.
Star India Pvt. Ltd has entered into the contract for rebroadcasting of its channels.
You or the hospital, has not entered into the contract for broadcasting or re-broadcasting of the channels. TDS would definitely be applied when these operators make payment to the Star India Pvt. Ltd, but it should not be applicable to you (hospital), the subscriber.
[Just read the first page of https://www.startv.com/media/2830/application-for-request-of-signals-of-channels-of-star-must-provide_06-12-2018.pdf]
17 January 2019
I wish to add one more point. "Whrereas the above service doesn't get covered as broadcasting as it has a different meaning." As mentioned, in the previous post, it appears that it is broadcast(re-broadcast) but TDS is not attracting because you have not contracted for broadcast, but the one from whom they receive the signals has entered into a contract for broadcasting/rebroadcasting
CAclubindia
