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Tds deducted by client for an event management company

Terence. J. D'Souza (Analyst) (36 Points)

20 March 2015

Hi,

Company ABC is an Event Management company providing both Manegerial Services (Planning, Sourcing, Execution etc.) for and event as well as Production (Printing Event Material, Event Setups etc.)

Now, they undertake such work on behalf of Clients who are the actual hosts of the events. However, the Event Management Company bills the Client for a total amount and makes payments to its artists and vendors accordingly.

There exists a confusion regarding TDS that shall be deducted by the client. The company claims that TDS should be deducted u/s 194C @ 2% but the Client claims that TDS will be deducted u/s 194J @ 10%

Need clarification on the same please.

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3 Replies

Dhananjaya N (Manager - Finance & Accounts) (31 Points)
Replied 20 March 2015

TDS should be dudected under section 194C (2%) for event management service since it is deemed as contract.

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Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 20 March 2015

What is the logic and rationale provided by the Client such that it wants to deduct tax at source at 10%.

Thanks,

Dipjyoti Majumdar (CA in service & CS. dipmaj@ rediffmail.com ) (3468 Points)
Replied 20 March 2015

It is safer to suffer a deduction @ 10% under section 194J initially and get it adjusted against self assessment tax payable or cliam refund though this might affect your cash flows. Here, the nature of service rendered is to be examined. If there is a bundled service or the proportion of managerial service or consultancy element is more and predominant it will be difficult to prove to the contrary with the AO if there is a scrutiny assessment later on.

Regards,