Become a Certified GST Practitioner with CA Arun Chhajer. Register Now!

Advertisement Contract

Kchitiz Udaipuria (Professional) (88 Points)

29 June 2010

An FMCG company has a contract with an agent. The agent on behalf of the co. incurs expenses for broadcasting of advertisement on a tv channel. The agent then raises a bill for reimbursement of broadcasting expenses plus 3% agency commission on the gross amount of broadcasting bill and service tax thereon. Currently the FMCG co. is deducting TDS u/s 194C on the whole bill raised by the advertising agency. But i think the agency commission portion shall be liable to tds u/s 194H pls suggest with adequate provisions

Reply
Follow
Share

6 Replies

SALIL (PRACTICE) (63 Points)
Replied 29 June 2010

For academic interest u can argue,but think practically from the angle of deductee.

Upgrade to CAclubindia Pro. Subscribe Now!

Kchitiz Udaipuria (Professional) (88 Points)
Replied 30 June 2010

Sorry Salil I cudnt get you...I wanted to know whether 194C will apply or 194H ?

LOKESH (Fresher) (80 Points)
Replied 30 June 2010

i think that 194H will apply bcoz agency major income would always include commission and they are formed for that purpose only so therefore it falls under 194H..

this is my view, if i am wrong pls correct me..

SALIL (PRACTICE) (63 Points)
Replied 30 June 2010

see the differance in rates of deduction-

2% and 10%

As it is seen if u r saying like that u r right.But the deductee would suffer a higher deduction at a time he could have got away with alower deduction.

LOKESH (Fresher) (80 Points)
Replied 30 June 2010

sorry for my earlier reply if the second company is invoicing in its own name then in that case it would be a contract. (getting orders processing them and broadcasting) therefore 194C would apply. If incase it is invoicing in the principle name and then getting commission for the services rendered them in that case it would be 194H. if i am wrong even now.. pls correct me..