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Tds on contract / professional fees on event expenses.

Soumya (Senior Accounts Executive) (235 Points)

12 July 2016

Dear All,

Can any one suggest on my question.

We have a regular vendor who provides tent services for event.

Should i deduct TDS @ 10% as professional fees.

or should i deduct TDS @ 2% as contract by having agreement with them.

Plz suggest.

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15 Replies

Dinesh Mertiya (PROFESSIONAL) (761 Points)
Replied 12 July 2016

deduction under section 194J is not correct

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CA Saurabh Singh (Practising Chartered ) (974 Points)
Replied 12 July 2016

Hello Soumya,

Deduction u/s 194J is only done when the same payment is made to a professional, the professional has been defined in Income Tax Act which include persons like Architect, CAs, Doctors,etc. However in your case there is a regular contract with tent person though he ius providinga service and is liable to service tax but nt being covered under the definiton of professional deduction shall be made u/s 194 C and not 194J

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Dinesh Mertiya (PROFESSIONAL) (761 Points)
Replied 12 July 2016

If TDS provisions are applicable on your business/activity then
TDS will be deducted under section 194C, in following manner
if the recipient is individual/ Huf .......................................Rate ..... .1%
if the recipient is other then individual/HUF ...................Rate.........2%

1 Like

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 12 July 2016

tds should be deducted in this case u/s 194C

Soumya (Senior Accounts Executive) (235 Points)
Replied 12 July 2016

But My CA is saying to deduct TDS @ 10% as he is providing services.

I told him if i make contract agreement copy then it may comes to 194C.

But my CA denied.

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CA Saurabh Singh (Practising Chartered ) (974 Points)
Replied 12 July 2016

The deinition of profession is as under

professional services" means services rendered by a person in the course of carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or advertising.

Please discuss sec 194J with your CA, head definiton of profession

1 Like

CA Harshal Totla (Chartered Accountant) (2229 Points)
Replied 12 July 2016

Agree with Saurabh sir, this case will definately not covered under 194J. This is a case of pure contract and accordingly section 194C will attract.

Dinesh Mertiya (PROFESSIONAL) (761 Points)
Replied 12 July 2016

Soumya ji,

I agee with CA Saurabh Singh

Under section 194C, 1% and 2% rates have been prescribed by department.
I think, you CA has suggested you to deduct under section 194I (for Rent) i.e 10%
In this case TDS is subject to deed/agreement or any other documents

1 Like

Mohan (Audit Assisstant & Accounts Manager) (489 Points)
Replied 12 July 2016

Although the case is covered u/s.194C there would not be any harm to both parties if TDS is @ 10%. However, application of correct section is what should be kept in mind. In your case correct section is 194C.

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Soumya (Senior Accounts Executive) (235 Points)
Replied 12 July 2016

Thanks to all.

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Tarunjay (GM) (42 Points)
Replied 12 July 2016

Pls note that letting out the furniture or plants comes under 194(I) and rate would be 2%. the same can also be considered under 194C but not in any case 194J.