TDS on Debit Note for reimbursement

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Vidya (Querist)
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11 December 2007 Hi,

One of our clients, 'A' provides infrastructure to another company 'B' and B deducts TDS u/s 194I and pays infrastructure charges to A.

But A also pays various other charges, like Security, housekeeping, professional charges to third parties and raises a debit note on B towards its share of expenses.

Is TDS applicable on above. If yes, at what rate?

Would there be any difference if there is a contract to this effect?

S.Srinivasaraghavan

S.Srinivasaraghavan (Expert)
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11 December 2007 You have mentioned the status of B as a company. I hope A is also a company.A also has to deduct tax on chargeable services rendered by B to A. Security and house keeping (maintenance) will come unbder 194C and professional charges under 194J. Contract is a general term, applicable to all. What is contemplated in 194C is Works contract. Therefore if you are referring to any execution of written contract, it hardly makes any difference, as far as the applicability of TDS provisions. A contract is a contract whether oral or written.