TDS on honorarum payment

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

02 March 2010 Sir,
In one of the company a person is given Rs.8500/- per month for supervising and co ordinating work. The amount is paid as honorarium. It is debited in wages account. The period of appointment is for one year. And normalyy it is renewed every year. Whether the treatment is correct. As it is debited in wages it do not attract tds as the payment is less than the basic exemption limit.One auditor aruges that this payment attracts TDS as contract payment. Is it necessary to deduct TDS as Contract payment. This is very important in a practical situation. Kindly give an expert answer

CA Vijay Kumar Gupta

CA Vijay Kumar Gupta (Expert)
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02 March 2010 unless you appoints him as a regular employee of your organisation, it is covered under contracr and liable to TDS.

Lekh Sood

Lekh Sood (Expert)
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02 March 2010 "Any payment" is covered under TDS provisions.If this service is not professional service,as it appears,then it will be covered u/s 194C as "any payment"for contract.Whether the total payments in a year are less than the exemption limit or not is immaterial.

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Querist : Anonymous

Querist : Anonymous (Querist)

02 March 2010 Can we treat it as salaries and wages and avoid tax deduction

CA. Dashrath Maheshwari

CA. Dashrath Maheshwari (Expert)
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02 March 2010 An honorarium is an ex gratia payment made to a person for their services in a volunteer capacity or for services for which fees are not traditionally required. This is used by groups such as schools or sporting clubs to pay coaches for their costs. Another example includes the payment to a guest speaker at a conference to cover their travel, accommodation, or preparation time.

Yes this is to be taxed as income from other sources and TDS is applicable u/s 194C

Querist : Anonymous

Querist : Anonymous (Querist)

02 March 2010 The PAYEE argues that he is paid fixed amount monthly and it is paid as honorarium and debited in salaries and wages so TDS is not applicable. Moreover he argues that no one is employed under him like other contracts.He is doing the supervising work slone.IS his arugument justifiable and there by avoid tds and include in salaries and wages?

Querist : Anonymous

Querist : Anonymous (Querist)