prasad (manager) (171 Points)
25 April 2013
Dear All,
Ours is a small software services private limited company (< 10 employees). We would like to hire a contract employee for our project for couple of months (or may be extended for long term). Since we don't know for how long the contract employee will work with us, we would like to deduct TDS and Professional Tax on every month. Our question is whether we can deduct the TDS and Professional Tax for contract employee?
Thanks in advance.
Prasad
Karthick Krishnan
(Propreitor)
(61 Points)
Replied 26 April 2013
Agree with the Cooments given, The contract employee is gonna work in your company for development of software thus being in nature of technical services, Deduct TDS @ 10% under Section 194J
CA.Arun (M.COM,ACA,ACS,CMA)
(Proprietor)
(40 Points)
Replied 27 April 2013
PT will not be applicable since there is no employer and employee relationship. But TDS will be applicable @ 10% once it cross Rs. 30000/- P.a. TDS will be deducted at a lower rate or Nil rate if the professional submit the Certificate (sec 197) obtained from the Income tax department.
CA CHINTAN A THAKKAR
(Chartered Accountant)
(33 Points)
Replied 29 April 2013
TDS will not be at 10%. TDS will be at the rates applicable u/s 192. So that is to say as per the payment of salary. Basic exemption plus investment will be allowed as deduction and if then after salary exceeds total of basic exemption plus investment TDS can be made at the rates applicable.
prasad
(manager)
(171 Points)
Replied 29 April 2013
Thanks all for overwhelming response.
Dear Mr. Arun Kumar Ghadei,
We are planning to give offer letter to the Contract Employee saying he will be working on Contract basis with us. We will pay his remuneration in the form of company's check or tranferring the amount into his bank account (in other words he will be part of our company's payroll). In the above said conditions, will PT applicable for him?
Thanks in advance,
Prasad.
If you want to include that person in payroll then PT will be applicable..., or else TDS @ 10%. However such employees are not called contract employees... They are called as temporary employees... But if i were in your place would have deducted TDS u/s 94 J as they are providing you specialized services...
CA.Arun (M.COM,ACA,ACS,CMA)
(Proprietor)
(40 Points)
Replied 30 April 2013
Absolutely right.. you have to deduct PT as well you have to deduct tDs by seeing the basic exemption limit.. thanks
sumibal
(HR)
(22 Points)
Replied 23 August 2018
I was reading the above query raised by Manger regarding TDS & PT deduction for Contract Employees . Since its posted a 5 years ago just wanted to reconfirm is logic still remains same . i.e. Employer will deduct PT for employees on roll and TDS for contract employees.
Also I would like to know , does we have contact of 2 nature , one through the 3rd party & other one directly with Contract employees. Is in both sceanrio contract employees are considered as employees . If so , as am employers we need to deduct PT or TDS for them
Thanks,
Smitha
CAclubindia
