Deduction of tax at source - Fees for professional or technical services
TDS on service tax on on professional services :After clarification on non application of tds on service tax on rent under section 194I ,doubts has been raised that the same rule should be applicable on 194J or not .To clarify the issue ,A clarification has been sought by Bombay Chamber & commerce & Industry regarding applicability of circular 4/2008 on section 194-J ,and asked the department that whether TDS is to be deducted on service tax collected on the service tax portion collected along with professional services.And it has been replied by the department that scope of clarification issued for section 194-I(RENT) can not be extended for section 194-J(Prof. services).The reply of the department is embedded hereunder
Payments by advertising agency to artistes - When an advertising agency makes payments for professional services to a film artiste such as an actor, a cameraman, a director, etc., tax will be deducted at the rate of 5 per cent—Circular: No. 714, dated 3-8-1995/Circular : No. 715, dated 8-8-1995.
Clarifications on payments to certain institutions/agencies - The following clarifications are issued:
-
- Payments to recruitment agencies are in the nature of payments for services rendered, and hence will be subject to TDS under section 194J of the Act, and not under section 194C of the Act.
-
- Payments made by a company to a share registrar will also similarly be liable to tax deduction at source under section 194J and not under section 194C.
-
- In respect of payment of commission to external parties for procuring orders for the company’s products, rendering of such services is not covered under section 194C, but may involve payment of fees for professional or technical services, in which case tax may be deductible under section 194J.
-
Payments made to a hospital for rendering medical services will attract deduction of tax at source under section 194J.
-
- Commission received by the advertising agency from the media would require deduction of tax at source under section 194J.
-
- Routine/normal maintenance contracts which include supply of spares will be covered under section 194C. However, where technical services are rendered, the provisions of section 194J will apply in regard to tax deduction at source.
-
- Since section 194J refers to ‘any sum paid’, reimbursement of actual expenses cannot be deducted out of the bill amount for the purpose of tax deduction at source.