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tds for internet service provider

(Guest)

Please let me know whether the payment to internet service provider will be covered under section 194J or section 194C. We have agreed to take services of ISP for six months.

Thanking you.

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2 Replies

Amit Sharma (article) (2677 Points)
Replied 31 December 2007

Dear Sir,

As per my knowledge it is 194C---- as u have agreed for a six month contract with them.

It cannot be profession for sure.

Sir, if i am wrong , correct me.

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CA. Amit Daga (Finance Controller CA. CS. CFA. CIFRS. M.COM. ) (9017 Points)
Replied 31 December 2007

Hi Vipul Customers of Basic Telecom Service Providers have been following the practice of deducting tax at source u/s 194C and 194J of the Income Tax Act, 1961. This is despite the fact that the Madras High Court has passed a judgment that no tax is deductible in respect of payments made to telecom service providers in respect of telecom services rendered by them. This results in unnecessary administrative inconvenience to the basic telecom operators who have to manage mass volume of transactions and also because of their other business processes like late payment fees etc. are impacted by outstanding balance which arise because the customers delay the handing over of TDS certificates. It is thus represented that a clarification be issued confirming that no tax should be deducted at source in respect of payments made to licensed telecom service providers and ISPs for telecom and internet services respectively provided by them pursuant to the licenses granted to them by the Government of India.