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Tds

Indrakumar KS (Sr.Accounts /Finance Executive) (72 Points)

09 December 2016

Dear Sir, If government provide a professional services to pvt company, if the amount of single contract 30K . whether we have to deduct tds for this. Or if service provider is a govt. is it not to deduct tds

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3 Replies

Indrakumar KS (Sr.Accounts /Finance Executive) (72 Points)
Replied 10 December 2016

Dear Sir,

Please try to solve this issue sir

Regards

Indrakumar KS

9611219604

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Sanjay S (Chartered Accountant) (1375 Points)
Replied 11 December 2016

Okay. Mr. Indrakumar. The question you have put across is one which requires some analysis of section 194J, section 6, section 2(31) of the Income Tax act, 1961.

First, you may have to go through section 194J carefully.

Secondly, you may understand that TDS u/s 194J is applicable only when 'Any person (other than Indvdl or HUF)' makes a payment of specified nature to a 'RESIDENT'. Hence, this implies that the person receiving the payment should be a RESIDENT.

Now, in your question, the entity receiving payment is the GOVERNMENT. Hence the issue here narrows down to whether the terminology used 'RESIDENT' includes a GOVERNMENT.

As per section 6, a RESIDENT should first be a PERSON. The definition of PERSON is given under section 2(31) and one may realise that Government is not covered there-in. Hence the Government is not a RESIDENT.

On a conclusive note, it can be rightly said that, Any payment made by your private company to the Government for payment towards professional services would not attract TDS u/s 194J since TDS provisions are attracted only when payment is made by a person to a RESIDENT PERSON.

NOTE: Government Company is not the same as Government. A Govt. Co. is a PERSON and TDS is to be made in that case.

Hope this clarifies the issue.

Contrary views are encouraged.