14 August 2010
Dear Expert, Can TDS be deducted at 2 rates on two separate items in the same bill? Ex.A bill has CA professional fees & manpower supply charges - can tds be deducted at 2 diff. rates for each one of them?
14 August 2010
Sanjay Ji, in my view..it is possible to deduct TDS at Professional charges at on the other services (in case they are not professional) on normal charges.
Although, issuing separate bill is always preferred.
My opinion is based on my exp. where i saw bills where bills consist of two rates of CST or Vat like 2% or 4%. I am not sure, that it applies here or not.....
But my view is only on that basis, don't know where we'll get the provisions for that.
14 August 2010
According to me TDS need to be deducted in one section which is applying higher rate.
Source:circular
Payment of any sum shall be liable for deduction of tax only under one section It has been brought to the notice of the Board that in some cases persons responsible for deducting tax at source are deducting such tax by applying more than one provision for the same payment. In particular, it has been pointed out that the sums paid for carrying out work of advertising are being subjected to deduction of tax at source under section 194C as payment for work contract as also under section 194J as payments of fees for professional services. 2. It is hereby clarified that each section, regarding TDS under Chapter XVII, deals with a particular kind of payment to the exclusion of all other sections is this Chapter. Thus, payment of any sum shall be liable for deduction of tax only under one section. Therefore, a payment is liable for tax deduction only under one section. Circular : No. 720, dated 30-8-1995.
But this circular not saying the apply which rate. my opinion is higher rate will safer side for dispute in future
14 August 2010
IF WE KNOW THE SERVICE PROVIDER IS PROFESSIOANL THEN WHY WE GO TO REFER ANYTHING. TDS WILL BE DEDUCTED U/S 194 J.
A CA FIRM IN WHICH MY FRIEND IS PARTNER ARE PROVIDING MAN POWER FOR ACCOUNTS TO A COMPANY. THEY RAISED BILL FOR THE SAME , TDS WILL BE DEDUCTED BY COMPANY U/S 194 J. IT IS PRACTICAL CASE.
Service nature is important for TDS instead of person, Suppose a CA Professional Renting a Building to company, what will be the TDS section need to considered by company,whether 194J or 194I?
14 August 2010
Dear Ramesh Ji, I know that As per query, there is in bill professional charge plus manpower supply i.e he is supplying manpower related to accounting work to his client. Hence In this question specific , tds will be deducted on 194J.
IF CA professional rented out his building then he will not raised rent bill with his professional service.
14 August 2010
First of all it rarely happens that a CA will raise a bill for rent and even if he raise i think he will be wise enough to issue separate bills. Many times if consolidated biil is raised by vendor we simply ask them to issue separate bills in their own interest and they oblige. In case consolidated bill is raised as per law TDS will have to be deducted on such consolidated bill.
15 August 2010
The circular which Rameshji is referring to is that TDS on a particular expense should be deducted under one section only and it has nothing to state if two composite services are billed in the same bill on which TDS is deductible under different sections. So the circular states that if TDS is deducted u/s 194J on a particular service then TDS should not be again deducted in any other section.
So now going by the query and as Rahul has pointed out separate bills are preferred and always bills are raised for different services and it is not seen anytime that two services are billed in same bill. So there is no question of deducting TDS at different rates in the same bill itself.
Also Bansalji has stated above that CA's providing manpower but still TDS is being deducted u/s 194J is not correct as as per circular no. 715 dated 8-8-1995 it is clearly stated Provisions of section 194C apply to a contract for carrying out any work including supply of labour for carrying out any work and the word any work is mentioned so TDS should be deducted u/s 194C only. If the services are like on retainership basis and bill for professional serivce is raised then the same will be liable for TDS u/s 194J.
And in the last point bansalji states if CA is providing renting service as well as professional service to the client then as stated by Sanjayji above even if a CA raises a bill for rent i think he will be wise enough to issue separate bills and that is the norm of the industry to issue different bills for different services.
Supply of manpower for doing accounting job can not be construed as mere supply of labour.
Of course, the CA firm, will do some in house selection procedure, before sending the candidate to the client's site for accounting job, & that for all practical purpose will be covered under 194 J.
So the question of charges TDS at different rates & at different sections does not arise, in this case.
However, the basic question, If a bill covers items under two different sections, how it is to be dealt with, is still unanswered.
I have seen many instances, where a consolidated bill has been issued, but it has a mention of clear bifurcation of material cost & labour cost, in that scenario, TDS has to be deducted on labour cost portion only.
Only where the material & labour cost are mentioned in combined form, TDS applies on the total bill.
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