30 October 2012
Sir Please give me the rate of TDS to be deducted in the below case:
ABC & co. gives an assignment to Mr.X(he is not an employee of the co.) to test the skill and performance of the employees and to give rating to the employees based upon their skill and performance. Mr.X is getting fees from the organisation on Assignment basis. Mr.X in turn, assigns the same work to an another individual for a fixed daily pay. (there is no employer employee relationship between Mr.X and the individual. In fact these Individuals raise invoice on Mr.X while receiving payment.)
The company will deduct TDS @ 10 % while paying to Mr.X as this is a professional service u/s 194J.
Please give your Expert opinion on the following:
1.From the point of view of Mr.X- Does this "fixed daily payment" to individual amounts to payment for Professional services ? or this is a mere contract ?
(Note:Mx. X is covered u/c 44AB in the preceding F.Y. and payment to individual exceeds Rs.30000/year)
30 October 2012
The provisions of TDS under section 194J will not change by merely assigning or sub-assigning the professional or technical work to another person.
Therefore Mr. X is liable to deduct tax @ 10% on payment to an individual as he is covered under section 44AB of IT Act and also fulfill the criteria of limit of Rs.30000 in a FY.
However, there exists any contract between X and an Individual about the nature of work on regular basis, then TDS U/s 194C will attract.
30 October 2012
Simply the work done by the individuals is the same as what Mr. X is doing for the company if it is professinal service to the company then obviously Mr. X is also availing professional service from the the individuals and TDS will be deducted @10%
CAclubindia
