We have hired a person for consultancy & would pay him 10,000 per visit for his services . How to calculate TDS on this amount ? & is it applicable?
25 Replies
J. K. Ratan
(Compliance Advisor)
(794 Points)
Replied 23 March 2015
Dear Sir
As per section 194J of income tax act 1961
A person (other than Individual or HUF subject to condition 44AB) will have to deduct TDS @ 10% on payment made or credit given (whichever earlier)
-to any person for
-techenical or professional service
-Exceeding INR 30000
In your case if you have signed a contract or expecting to receive service in future on regular basis than start deduct TDS on 1st paymet of INR 10000 (as you Mentioned)
CA AnKiT BoHrA (AB)
(Manager)
(25955 Points)
Replied 23 March 2015
TDS @ 10% under 194j, if crosses the limit... if you knows that limit wil b crossed than only deduct tds from the first bill... else wait until it crosses the limits, and then charge on the whole amount altogether
JD
( Business)
(352 Points)
Replied 23 March 2015
Hi Jay ,
Thanks fr the info , But as you mentioned Rs. 30,000 - is it per month? i dont think he would visit regularly , maybe once in a month . Assuming that we would be paying him Rs. 10,000 every month .
Thanks in advance
CA AnKiT BoHrA (AB)
(Manager)
(25955 Points)
Replied 23 March 2015
its for complete financial year limit under 194 J
if 10000 for every month, then u need to deduct tds from 1st bill
JD
( Business)
(352 Points)
Replied 23 March 2015
Is there anything we can do to cut down his tax bill like paying it as food & conveyance allowance, etc?
JD
( Business)
(352 Points)
Replied 23 March 2015
TDS @ 10 % would sum upto Rs. 1000 . Well So i would end up paying him Rs. 9000.
Well i am a newbie in the above context , hope my calculations are correct.
CA AnKiT BoHrA (AB)
(Manager)
(25955 Points)
Replied 23 March 2015
if he can raise separate bill for these, then amount can b shown as reimbursment of expenses
if for a single bill both items are there u need to deduct tds on the overall amount...
for reimbursment of expenses, also u need to have a clause in ur contract
also refer this
https://sktyagidt.com/upload/article/66.pdf
CA AnKiT BoHrA (AB)
(Manager)
(25955 Points)
Replied 23 March 2015
yup exactly, one more thing as he is providing u consultancy... i think he wil charge service tax also in the bill... then u need to deduct tds only on the service amount, not on the tax part
for better explanation c this eg. service charges = 10000
Consultancy charges = 10000
Service tax @ 12.36 = 1236
total bill amount 11236
TDS deducted = 10% only on 10000 = 1000
payment to party 10236
if no service tax in the bill then simple 10000-1000(TDS)= 9000 Payable to party
JD
( Business)
(352 Points)
Replied 23 March 2015
Hi i just went through
section 194J of income tax act 1961
It states for a particular FY year the amount should not exceed 30,000.
It states for a particular FY year the amount should not exceed 30,000.
Our consultant guy has just visited in the month of march 2014 , & the payment would only be generated for the month of march ,so for the ongoing FY year , i guess TDS is not required? am i correct ?
CA AnKiT BoHrA (AB)
(Manager)
(25955 Points)
Replied 23 March 2015
| Originally posted by : CA AnKiT BoHrA | ||
 |
its for complete financial year limit under 194 J if 10000 for every month, then u need to deduct tds from 1st bill |
 |
yes then u need not to deduct TDS... As i had already mentioned you this that the limit is for financial year....
JD
( Business)
(352 Points)
Replied 23 March 2015
Serivce tax as well? How can i get a confirmation on this .
JD
( Business)
(352 Points)
Replied 23 March 2015
But Ankit , What about the service tax? is that applicable?
CA AnKiT BoHrA (AB)
(Manager)
(25955 Points)
Replied 23 March 2015
you can c the bill na... if service tax is charged than dont deduct TDS on that part only.... you need to deduct tds only on the consultancy amount i.e. as u said 10000
CA AnKiT BoHrA (AB)
(Manager)
(25955 Points)
Replied 23 March 2015
thats not from your side, the consultant wil charge it, if service tax is applicable on him
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