TDS on Bandwidh Usage

This query is : Resolved

CA Anil Jain (Querist)
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24 October 2008 is TDS deductible on SMS service using by a concern from MTNL / BSNL.
Like some concern provide free messaging to it's user nd it get monthly bill from MTNL. Whether it sud be covered in Internet usage nd deduct TDS or in Telephone charges which will attract FBT.
or any other treatment.

suggstions are welcomed.

Wishing u all a very happy nd prosperous diwali season.

Thnx & Regards,
Anil Jain
9818 921865

Hiral Raja

Hiral Raja (Expert)
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13 November 2008 SMS service is a standard service and hence based on the judgement of Skycell Judgement 2001-(251)-ITR -0053 -MAD, it has been held that the TDS u/s. 194J is not applicable for such services. The lines of the judgement were as follows "Section 194J, as also Explanation 2 in section 9(1)(vii) of the Act were not intended to cover the charges paid by the average house-holder or consumer for utilising the products of modern technology, such as, use of the telephone fixed or mobile, the cable T.V., the internet, the automobile, the railway, the aeroplane, consumption of electrical energy, etc. Such facilities which when used by individuals are not capable of being regarded as technical service cannot become so when used by firms and companies. The facility remains the same whoever the subscriber may be - individual, firm or company.". Also TDS will not be applicable u/s. 194C since there is no contract for work and labour.

Henve I feel TDS is not applicable in the instant case.