TDS on Manpower Contract

This query is : Resolved

Querist : Anonymous

Querist : Anonymous (Querist)

31 July 2010 We have one manpower agency who is suppling manpower to us. But we had a contract with the vendor.

We used to deduct the TDS @ 194J. But the vendor is telling that we had a contract with the vendor so we should deduct TDS @194C.

Kindly suggest in which section the TDS will come ?

CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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31 July 2010 In my opinion, its a technical service & TDS should be deducted u/s 194 J

CA. Pradeep Nayak

CA. Pradeep Nayak (Expert)
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31 July 2010 Supply of manpower under a contract will attract TDS u/s 194C.

However, if any consultancy fee is paid to a recruitment agency, it will attract TDS u/s 194J.

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CMA. Subhash Kumar Jha

CMA. Subhash Kumar Jha (Expert)
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31 July 2010 I agree, if its a simple labour contract : 194C will apply.

But as per the terms manpower agency, in general, specifies a technical service like calling candidates, evaluating them vis-a-vis client's requirement & after shortlisting them, arrange the final selection procedure with the client. These services will of course fall under 194 J.