Nature of service under 194j & 194c

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2013 Dear Expert,

How can we differentiated between any service fall under 194J professional category or 194C contract category ?

thanks in advance.

Dintakurthi Tirumala

Dintakurthi Tirumala (Expert)
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31 July 2013 If you paying any fee to the professionals(experts in such type of work)with out making any agreement for completing their job depending on the work or job then it is called professional fee and liable for TDS under section 194J.

Otherwise you paying some fixed amount as per the agreement for doing work or job irrespective of the cost then it called contract and liable for TDS under section 194C.

For example A LTD is a public company which is having 100 employees it want to conduct a free medical checkup and providing necessary treatment to it's employees with the own cost of company. For this purpose it consult a doctor to provide medical checkup and treatment to their employees and the amount of the payment of fees is depending on the checkup and treatment provided to each and every employee individually then it is called professional fees and falls u/s 194J.

Instead of paying fees based on the each and every employee cost the company make an agreement with the doctor to provide medical checkup and treatment where ever necessary with the some fixed amount(i.e irrespective of the cost to the doctor) then it is called contract and falls u/s 194C.

For more clarification following examples and explanation:

Assume the company A has Three employees X,Y,Z and provided medical checkup and treatment with the company's cost.

For this employee X requires and sufficient only medical checkup and need not any further treatment(i.e no illness to him) for this doctor has charged Rs. 1,000

Employee Y requires medical checkup and needs some X-rays and scanning and some little treatment(i.e met for small illness) for this doctor has charged Rs.3,000

Employee Z requires medical checkup and needs X-rays and scanning and a minor operation or surgery for this docotor has charged Rs. 10,000.

So now company pays total Rs.14,000(1000+3000+10000) to the doctor after receipt of all bills regarding all treatments and checkup costs and fees then it is called Professional fee and comes u/s 194J.

Instead of like above the company make an agreement with doctor to complete all the above process for Rs. 12,000 before to commencement of job and company pays it to the doctor as per agreement then it is called contract and comes u/s 194C.

NOTE: THE ABOVE EXAMPLE I.E EXAMPLE WITH THE DOCTOR MAY NOT SUITABLE FOR CLASSIFICATION OF 194J AND 194C BECAUSE OF COST OF TREATMENT GENERALLY WE CAN'T ESTIMATE UNLESS CHECKUP. BUT FOR YOUR UNDERSTANDING I EXPLAINED WITH SUCH EXAMPLE ONLY.

However for better understanding another following example.

Company wants to construct a building for this purpose it approached an engineer.

If the company paying cost of fees to the engineer depending on the services provided by him at the time of service provided by him to the company whenever required then it is called professional fees and comes u/s 194J. Instead of paying fees like above it make an agreement to pay fees to the engineer with a fixed amount of fee to provide his services to the company from the date of starting of construction of building and its process to till the date of completion of construction of building then it is called contract and comes under 194C.

NOTE: JUST FOR YOUR BETTER AND CLEAR UNDERSTANDING I PROVIDED YOU THE ABOVE EXPLANATION AND EXAMPLES TO CLARIFY AND REMOVE YOUR DOUBTS AND CONFUSION. SO DON'T BE FEEL IRRITATE FOR ALL THE ABOVE EXPLANATION.

FOR ANY FURTHER DOUBTS WITH REGARDS ABOVE YOU SHALL FREELY POST YOUR DOUBT.

OM SAI SRI SAI JAI JAI SAI