Tds deduction

This query is : Resolved

Lijo Philip (Querist)
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20 August 2011 Sir,

Is TDS applicable on payment made to vendors of Govt Registered with the Registrar of Copyrights, Government of India in 1996, as the Copyright

Kindly suggest at what rate the TDS shall be deducted ( 2% or 10%)

Regards,

Lijo Philip

CA Chitta Ranjan Das

CA Chitta Ranjan Das (Expert)
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20 August 2011 No tax has to be deducted for the payment made to Government, RBI, Corporation, whose income is exempt from tax or mutual fund specified u/s 10(23D.

The nature of payment mentioned here in above matter, is payment to "pure Government and not other than pure Government". Here, the payment is made to vendors of Government and not to pure govt.Hence, TDS to be deducted.whether the deductee is pure govt or not, is a debatable issue.
Always there is an option open to the vendor for non-deduction of TDS by producing a NDC (No Deduction Certificate)to the deductor u/s 197 of IT Act. Hence, if NDC cab be submitted by vendor then TDS is not to be deducted. Also for the safe side and to avoid penalty it is better to deduct TDS.

The TDS to be deducted is at the rate of 10%. Because payment is towards professional and/or technical services.