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TDS On Royalty

10 January 2020

We are running franchise business, where we have to pay royalty on sales. now the owner of business sending us GST invoice (IGST) for ROYALTY. My Q is - do we need to deduct TDS or not. if yes - in which amount (base/

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Sivaramaraju G (Learner) (2398 Points)
Replied 10 January 2020

TDS under GST is not applicable to you as you are not a notified person, you have to deduct TDS for income tax purpose, Tax has to be deducted in case the payment is greater than Rs. 30,000 during the year.
Persons liable to deduct tax::
Every person, who is making a payment in the nature of fees for professional or technical services is liable to deduct tax at source with the following exceptions:
1. In case of an individual or HUF carrying on business: Where his turnover does not exceed Rs. 1 crore during the
previous financial year .
2. In case of an individual or HUF carrying on profession: Where his turnover does not exceed Rs. 50 lakh during the previous financial year

Rate of deduction of tax
Any payment covered under this section shall be subject to TDS at the rate of 10% .
In case the payee does not furnish his PAN then the rate of deduction would be 20% .