194j and out of packet exp--plz helpme out
This query is : Resolved
27 April 2012
Dear All,
should we deduct TDS on invoice Laywyer firm for legal expenses.. break upis as follows
legal exp 1 lacs
out of pocket exp 10000
tds is on full sor only on 1 lac
Regards
should we deduct TDS on invoice Laywyer firm for legal expenses.. break upis as follows
legal exp 1 lacs
out of pocket exp 10000
tds is on full sor only on 1 lac
Regards
27 April 2012
Dear Experts ...pla answer me....
is TDS would come on full amount or only on legal charges if break upgiven in same bill......
Dear Experts ...pla answer me....
is TDS would come on full amount or only on legal charges if break upgiven in same bill......
14 July 2024
Yes, you are required to deduct TDS (Tax Deducted at Source) on the payment made to a lawyer or a law firm for legal expenses. Here’s how it applies based on the breakup you provided:
### TDS on Legal Expenses:
1. **Nature of Payment:**
- The payment to the lawyer or law firm is categorized as a professional fee or payment for professional or technical services under the Income Tax Act.
2. **TDS Applicability:**
- As per Section 194J of the Income Tax Act, TDS is applicable on payments made for professional or technical services. Legal services fall under the category of professional services.
- TDS is required to be deducted on the total payment made for legal services, which includes both the professional fee (₹1,00,000) and any reimbursable expenses directly related to the services provided (₹10,000).
3. **Rate of TDS:**
- The current rate of TDS under Section 194J for professional or technical services is 10% (excluding GST, if applicable).
- Therefore, you would need to deduct TDS at 10% on the total invoice amount of ₹1,10,000.
4. **Invoice Breakup:**
- Legal Fee: ₹1,00,000
- Out-of-pocket Expenses: ₹10,000
- **Total Payment: ₹1,10,000**
5. **Calculation of TDS:**
- TDS Amount = Total Payment * TDS Rate
- TDS Amount = ₹11,000
### Conclusion:
- **TDS Deduction:** Yes, you should deduct TDS at 10% on the total invoice amount of ₹1,10,000 when making payment to the lawyer or law firm.
- **Payment:** Deduct the TDS and remit it to the government within the prescribed timelines. Ensure compliance with TDS filing requirements (Form 26Q) and issue Form 16A to the lawyer for the TDS deducted.
Always verify the current TDS rates and consult with a tax advisor or Chartered Accountant for specific advice tailored to your situation and to ensure compliance with applicable tax laws.
### TDS on Legal Expenses:
1. **Nature of Payment:**
- The payment to the lawyer or law firm is categorized as a professional fee or payment for professional or technical services under the Income Tax Act.
2. **TDS Applicability:**
- As per Section 194J of the Income Tax Act, TDS is applicable on payments made for professional or technical services. Legal services fall under the category of professional services.
- TDS is required to be deducted on the total payment made for legal services, which includes both the professional fee (₹1,00,000) and any reimbursable expenses directly related to the services provided (₹10,000).
3. **Rate of TDS:**
- The current rate of TDS under Section 194J for professional or technical services is 10% (excluding GST, if applicable).
- Therefore, you would need to deduct TDS at 10% on the total invoice amount of ₹1,10,000.
4. **Invoice Breakup:**
- Legal Fee: ₹1,00,000
- Out-of-pocket Expenses: ₹10,000
- **Total Payment: ₹1,10,000**
5. **Calculation of TDS:**
- TDS Amount = Total Payment * TDS Rate
- TDS Amount = ₹11,000
### Conclusion:
- **TDS Deduction:** Yes, you should deduct TDS at 10% on the total invoice amount of ₹1,10,000 when making payment to the lawyer or law firm.
- **Payment:** Deduct the TDS and remit it to the government within the prescribed timelines. Ensure compliance with TDS filing requirements (Form 26Q) and issue Form 16A to the lawyer for the TDS deducted.
Always verify the current TDS rates and consult with a tax advisor or Chartered Accountant for specific advice tailored to your situation and to ensure compliance with applicable tax laws.
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