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Tds on retainership fee to advertisement agency

12 January 2013

Hi All,

Under which section (194C or 194J) an assessee should deduct tax while making monthly retainership fee payment to advertisement agents.

Thanks..

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8 Replies

Devendra (Chartered Accountant) (4775 Points)
Replied 12 January 2013

As per my knowledge, TDS should be deducted u/s 194C.

Regards,

Devendra Kulkarni

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kavitha (studying final) (830 Points)
Replied 12 January 2013

first we need to know whether it is a contract or not, if it is a contract then 194 C ( is there any agrrement written)

2. if you are just seeking professional services of adv.agents then 194 J..

answer is based on your given information. feel free to ask for help

Vineet Goyal (Assistant Manager - Finance & Accounts) (702 Points)
Replied 12 January 2013

Retainership fees is considered as professional fees. Section 194J will be applicable.

Nikhil Kaushik (Fellow CA) (85743 Points)
Replied 12 January 2013

I believe advertising agencies are covered under 194C.

You may refer to the following explanation for this:

"During the course of the consideration of the Finance Bill, 1995, the Finance Minister clarified on the floor of the House that the amended provisions of tax deduction at source would apply when a client makes payment to an advertising agency and not when an advertising agency makes payment to the media, which includes both print and electronic media. The deduction is required to be made at the rate of 1 per cent. It was further clarified that when an advertising agency makes payments to their models, artistes, photographers, etc., the tax shall be deducted at the rate of 5 per cent. as applicable to fees for professional and technical services under section 194J of the Act."

Please don't refer the the TDS rates mentioned above. They are in reference to the law as it stood at the time of clarification offered by the Finance minister way back in 1995.

Nikhil Kaushik (Fellow CA) (85743 Points)
Replied 12 January 2013

Vineet is right that retainership contracts are generally covered under 194J. However, there is no harm in structuring the payments in a manner so as to justify deduction under 194C.

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karan jit singh (Consultant) (1299 Points)
Replied 12 January 2013

retainership fee means?

Retainership fees

Read more at: /forum/tds-on-retainership-fee-to-advertisement-agency-234734.asp#.UPFCyfLfiho

mukesh jha (Mgr Finance ) (38 Points)
Replied 14 January 2013

Advertisment agency is working on contractual basis and get retainersheep on business base So 194C should be applicable . But retaines ship paid for NEWS will be considered as professional and in this case 194 J will be applicable .