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Tds on Conveyance reimbursed by Professional

sanket (job) (50 Points)

10 February 2010

Hi,

If any professional who is reimbursing the travelling expence without any attachment, so, on this amount any tax is to be deducted or not?

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Aditya Maheshwari (CA in Practice) (35867 Points)
Replied 10 February 2010

Clarifications on payments to certain institutions/agencies - The following clarifications are issued:

- Payments to recruitment agencies are in the nature of payments for services rendered, and hence will be subject to TDS under section 194J of the Act, and not under section 194C of the Act.

- Payments made by a company to a share registrar will also similarly be liable to tax deduction at source under section 194J and not under section 194C.

- In respect of payment of commission to external parties for procuring orders for the company’s products, rendering of such services is not covered under section 194C, but may involve payment of fees for professional or technical services, in which case tax may be deductible under section 194J.

- Payments made to a hospital for rendering medical services will attract deduction of tax at source under section 194J.

- Commission received by the advertising agency from the media would require deduction of tax at source under section 194J.

- Routine/normal maintenance contracts which include supply of spares will be covered under section 194C. However, where technical services are rendered, the provisions of section 194J will apply in regard to tax deduction at source.

- Since section 194J refers to ‘any sum paid’, reimbursement of actual expenses cannot be deducted out of the bill amount for the purpose of tax deduction at source.

Circular : No. 715, dated 8-8-1995.