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TDS on shared services

swati (Officer-Accounts-Shared Services) (67 Points)

29 September 2011

A company is providing services like guest house, projector etc facilities to other subsidiaries companies.....and for that it is charging some amount and also deducting tds under section 194J......is that correct...plz reply....

whether it should be under 194c or 194j.....?????

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ACMA Obulirajan R (M.Com, ACMA) (1119 Points)
Replied 29 September 2011

If you have a combined contract for the guest house and supply of food and other expenses in one bill without the break up of each item and if you are using the guest house as and when required then 194C will be applicable and 2% tax has to be deducted.

Where you are using the guest house on a monthly basis and where break up is not availble for other expenses then TDS has to be deducted applying the rate of tds on rent - 15%.

Where you have seperate bills for each item ie guest house charges and also other utilities and using the guest house regularly on a monthly basis. For guest house rent - 15% tds and for utilities contract rate 2% tds.

If you have seperate bills and you are not using guest house regularly or as when require you are using and paying for the usage for entire amount contract rate of 2% tds is applicable.

TDS on Projector service will come under 194C

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swati (Officer-Accounts-Shared Services) (67 Points)
Replied 29 September 2011

thank u...bt i just had given the example of guest hose for reference only....what i am saying if one company is charging any amount from another company from same group then thoes charges are covered under 194 C or 194J???

ACMA Obulirajan R (M.Com, ACMA) (1119 Points)
Replied 29 September 2011

As long as two separate entity exist (though from same group) TDS would be applicable as per the nature.

swati (Officer-Accounts-Shared Services) (67 Points)
Replied 29 September 2011

ok.....say for example if the company is charging for projector facility available at a premise which is owned by say A ltd....and used by say B ltd......A ltd is charging from B ltd for the projector facility...then it would be under 194 C????