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TDS experts come n helppp....... m Waiting :)

rashmi (article) (59 Points)

12 February 2010

Heyyyy Allllll....... M in a dilemma.. :( :( ....SOOOOO plzzzz take some time out n help mee out....Now the situation goes something like this...

Ders this high paid employee in this organisation whose coming under the perview of TDS u/s 192 (Salary)...Now the organisation is also paying him some professional fees n on that account it is deducting TDS under section 194 J.....I feel that the amount paid to him as professional fees should also be considered as salary as"Anything and Everything given by an employer comes under Salary"......But the org is of the opinion that the employee is providing them with special services soo he is liable under 194 J n not section 192 for those special services....

SOOOOOO plzzz people suggest some way out as soon as possible....THANK YOUUUUU in anticipation :) :)

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7 Replies

Amir (Learner) (4016 Points)
Replied 12 February 2010

Dear Rashmi,

TDS will be deducted as per Sec 192 because "any fees " also falls within the meaning of salary...

Sec 17 defines Salary as follows -

For the purposes of sections 15 and 16 and of this section,

(1) “salary” includes—

(i) wages;

(ii) any annuity or pension;

(iii) any gratuity;

(iv) any fees, commissions, perquisites or profits in lieu of or in addition to any salary or wages;

(v) any advance of salary;

[(va) any payment received by an employee in respect of any period of leave not availed of by him;]

(vi) the annual accretion to the balance at the credit of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under rule 6 of Part A of the Fourth Schedule;

(vii) the aggregate of all sums that are comprised in the transferred balance as referred to in sub-rule (2) of rule 11 of Part A of the Fourth Schedule of an employee participating in a recognised provident fund, to the extent to which it is chargeable to tax under sub-rule (4) thereof; and

[(viii) the contribution made by the Central Government [or any other employer] in the previous year, to the account of an employee under a pension scheme referred to in section 80CCD;]

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Amir (Learner) (4016 Points)
Replied 12 February 2010

Dear Rashmi,

Tell me whether this is correct or not....

Suppose an employer takes his employee's premises on rent (say it exceeds Rs. 1,20,000) then I think TDS will be deducted u/s 194 I @ 10%..Because rent doesnot fall in the definition of Salary...

Incase, Rent doesnot exceed 1,20,000 then TDS can be deducted u/s 192(2B), if employee wishes so & makes a declaration for deduction of Tax..

Max Payne (employed) (2569 Points)
Replied 12 February 2010

Hi rashmi,

agree with amir bhai above, but u could also apply some simple test like

whether the special service rendered, comes within the scope of his employment or is closely related to it? If yes, it can b treated as salary itself...

If an employee does the work of a professional also, salary will be the section under which TDS should be made.... for eg, if a CA works in a company and provides them the legal compliance with his knowledge, TDS is u/s 192, not 194J.....

Further, professional fees should be as per the defintion in 194J.... see if there is a professional service within the meaning of that section...

CA VINAY BANSAL (In job with KPMG) (289 Points)
Replied 13 February 2010

Tds to b made u/S 194J 4 prfsnl fees paid.

sahana Murthy (Student) (123 Points)
Replied 13 February 2010

All payments made by payer to payee is considered as salary, where there subsists a relation of employer and employee between the two.

Hence Sec 192 applies.

regards

Sahana Murthy

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CA. Abhishek K. Pandey (Manager (Advance)) (901 Points)
Replied 13 February 2010

Yes. What I think is that it depends on the circumstances of case. Determine, is payment is salary or professional fees. As Sahana say "Employer-Employee relationship". This is important. If it is in the nature of salary, then TDS is to be deducted u/s 192. If it is a profeessional feesthen TDS is to be deducted u/s 194J. Proffessional services include accounting, engineering, architectural etc. Just like payment to a Company Auditor is not salary, but it is proffessional fees. So, TDS would be deducted u/s 194J in such case.

You have to look in that whats the nature of payment and then decide.