Tax deduction under section 194c-circular no. 717

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Querist : Anonymous

Querist : Anonymous (Querist)

26 February 2014 Would an advertising agency need to deduct TDS U/s 194C for payment to print media / elctronic media? or is tax deduction under section 194C-Circular No. 717 dated 14.08.1995 is still applicable or any change made for FY 2013-14

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Ganeshbabu K

Ganeshbabu K (Expert)
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26 February 2014 Tds 194 c applicable on payments made to ADVERTISING AGENCY
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No change in this

Querist : Anonymous

Querist : Anonymous (Querist)

26 February 2014 there for there is No TDS or 0 % TDS for print Media by advertise agency ???

Please clearify

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Querist : Anonymous

Querist : Anonymous (Querist)

26 February 2014 As per Circular No. -717 on 14..08.1995
Enlarging the scope of provision regarding deduction of tax at source from payments to contractors and sub-contractors
47.1. Sub-section (1) of section 194C provides for deduction of income-tax
at source from any sum payable for carrying out any work in pursuance of a contract between the contractor and the Government, local authorities, statutory corporations, companies, co-operative societies, statutory authorities engaged in provision of housing accommodation, etc., registered societies, trusts and universities. There is no requirement for deduction of income-tax at source where the contract is between a contractor and a firm. The payments under such contracts also need to be subjected to the requirement of deduction of income-tax at source. The Act, therefore, amends section 194C, in order to apply its provisions to the payments made in pursuance of a contract between a contractor and any firm.
47.2. In order to subject payments in respect of advertising contracts, broadcasting contracts, telecasting contracts, transport contracts and catering contracts to the requirement of deduction of income-tax at source, the Act amends section 194C by providing that the expression "work", used therein, shall also include : (a) advertising, (b) broadcasting and telecasting including production of programmes for such broadcasting or telecasting, (c) carriage of goods and passengers by any mode of transport other than by railways, and (d) catering. While the deduction of tax shall be at the rate of two per cent. of the amount in regard to items (b), (c) and (d) above, it shall be at the rate of one per cent. in the case of an advertising contract. The deduction in regard to item at (a) above shall apply when a client (i.e., an advertiser) makes payment to an advertising agent. When an advertising agency makes payments to their models, artists, photographers, etc., tax shall be deducted by it under section 194J of the Income-tax Act at the rate of Ten per cent. as applicable to fees for professional and technical services. There will, however, be no tax deduction at source when an advertising agent makes payment to the print or electronic media.

Note: Payment by an advertising agency to print media/ Electronic media-It is not subject or tax deduction under section 194C-Circular No. 717 dated 14.08.1995.

Ganeshbabu K

Ganeshbabu K (Expert)
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27 February 2014 Above i replied on tds appllicability on payment to advertising agency for advertisement
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As your query concerned tds applicability on payment by advertising agency to media agency
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In my opinion TDS 194C may applicable(even though cir 715 convincing i would like to say 194C can be done on safer side to avoid debate with dept later)
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section 40(a)(ia) was introduced and effective from 01.04.2005(after above circular 715 issued) which makes expenses would not be allowable to the assessee in case of failure to deduct TDS.
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So i recommend to deduct TDS as per 194C so that we can avoid issues with dept later,,
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Let other experts comment on this

CMA. CS. Sanjay Gupta

CMA. CS. Sanjay Gupta (Expert)
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27 February 2014 TDS not attracted. Circular still prevails.

Logic behind this exemption is that when an Advertising agency is making payment to print media it is not paying the amount for advertisement of its own and therefore it is also not booking this expense in PL A/c. When a customer makes payment to advertising agency then he makes payment after deduction of TDS u/s 194C. but when the agency in turn makes the payment to media it is not required to deduct TDS.

Hope its clear.

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CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)
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27 February 2014 TDS not apply for payment by advertising agency to print media/electronic media

It is very clear in circular 717.

Sec.40a(ia) disallowance will attract where the tds applicable as per chapter XVII-B, but not complied.

Circular 717 issued with reference to sec.194C, so we need to relate the circular only with sec.194C, and after that there is no updating circular on such provision hence the transactions not subject to TDS as per circular, then no question of disallowance under sec.40a(ia), if TDS not deducted

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